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First Quarter of the Fiscal Year Ending March 2019
August 13, 2018
RIZAP GROUP, Inc.(Sapporo Securities Exchange’s Ambitious 2928)
Copyright © 2018 RIZAP GROUP, Inc. All rights reserved.
Earnings Presentation
Disclaimer
RIZAP GROUP, Inc. (hereinafter referred to as the “Company”) has produced this document for the provision of corporate information on the Company and the Company’s group companies (hereinafter referred to collectively as the “Company Group”) and it does not constitute an inducement towards the shares issued by the Company or any other securities whether in Japan or overseas.
This document contains descriptions concerning the future, including forecasts, plans and targets, etc., related to the Company and the Company Group, but these descriptions are based on the information available to the Company at the time of preparation of this document under certain assumptions (hypotheses) and are founded on predictions, etc., made at that time. These descriptions and assumptions (hypotheses) may be objectively inaccurate or may not be realized in the future and consequently, future forecasts and actual results may differ greatly.
2
3
Index
Highlights P4
Consolidated Results for FY2019/3 Q1 P5
Results Forecast for FY2019/3 P29
Updates on Business P30
RIZAP GROUP Strategy P32
Updates on the RIZAP Businesses P74
“Offensive” and “Defensive” Management P81
Towards Achievement of the Mid-Term Business Plan, “COMMIT 2020” P106
Appendix. P112
Highlights
1. Revenue was record high for 9 consecutive periods (182% YoY)
* The Company has prepared the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) from the fiscal year ended March 31, 2016. The financial data for periods up to the fiscal year ended March 31, 2015 were stated based on Japanse standards. 4
2. Although operating income decreased temporarily (as planned) due to advance investments, the forecast is for ongoing record profit updates from the second quarter on
3. Establishing sustainable growth foundations based on the shift to a new management structure aimed at combining “offense” and “defense”
Consolidated Results for FY19/3 Q1
5
2011/3Q1
2012/3Q1
2013/3Q1
2014/3Q1
2015/3Q1
2016/3Q1
2017/3Q1
2018/3Q1
2019/3Q1
Record high for9 consecutive
periods
¥52.1bn
J-GAAP
¥28.6bn
Revenue
IFRS
6
FY18/3Q1
(Apr. – Jun.)
FY19/3Q1
(Apr. – Jun.)Change
Change%
Revenue 28.6 52.1 +23.5 182.1%
Operating income or loss 2.7 -3.7 -6.4 -
Income before income tax 2.5 -4.0 -6.5 -
Net income 2.4 -3.3 -5.8 -
Net income attributable to owners of the parent 2.1 -3.0 -5.2 -
Revenue was at 182% YoY. Although operating income decreased temporarily as a result of implementing growth investment in the RIZAP businesses and at the group companies, etc., this was as planned.
* Change percentage columns are left blank for the items posted negative figures in either previous or current fiscal year.
(¥bn)
7
Consolidated Results Summary (IFRS)
The forecast for the second quarter and onwards is for the
achievement of historically high profit in all quarters
(quarterly base)
8
First half Second half
(avg. for the last 5 fiscal years)
18.2%
81.8%
The Company’s business model is to recover
advance investment of the first half in the second half
* The figures stated are average figures of the composition ratio of consolidated operating income for the first half (1st and 2nd quarters) and second half (3rd and 4th quarters) of each of the fiscal year ended March 31, 2014 to fiscal year ended March 31, 2018.
9
Composition Ratio of Operating Income
1. Increased marketing expenses
(advertising expenses and sales promotion expenses)
2. Expenses associated with new store openings and
business expansion
3. Other advance investments, structural reform expenses, etc.
+1.9 billion yen +1.0 billion yen +1.1 billion yen
Total of main advance investments in FY19/3 Q1 was 4.0 billion yen
10
(increased store opening expenses, business commencement expenses, hiring expenses,
personnel expenses, etc.)
FY18/3Q1
FY19/3Q1
Consolidated Advertising Expenses Advertising expenses have been
invested focused on the 1st quarter of each term(¥ bn)
5.2
These will be augmented further this term 156% YoY
3.3
(including sales promotion expenses)
11
Main Advance Investments of FY19/3 Q1 (1)
Please watch the TV commercials
12
Inquiries increased significantly
due to the effects of TV commercial
(+164% YoY)
January to March 2018Average
April to June 2018Average
RIZAP Body MakingTrend in No. of Inquiries
13
Leading Indicator 1Main Advance Investments of FY19/3 Q1 (1)
FY18/3Q1
FY19/3Q1
1,976 peopleNo. of Reservations by
New Customers
1,039 people
Reservations increased significantly
due to the effects of promotions(+190% YoY)
This will contribute significantly to profit from
the 2nd quarter on
14
Leading Indicator 2Main Advance Investments of FY19/3 Q1 (1)
New products
Currently rolling out large-scale marketing and sales promotions
Silicone-free shampooReveur Zero
Number of stores receiving shipment:
About 8,000
Body washMellsavon
Number of stores receiving shipment:
About 7,500
Japan Gatewaynew TV commercial
Currently being broadcast nationwide 15
Leading Indicator 3Main Advance Investments of FY19/3 Q1 (1)
12.9
16.0
FY18/3Q1
FY19/3Q1
(¥ bn)
Revenue
(the RIZAP businesses, Maruko, HAPiNS total)
Revenue is scheduled to increase from
the 2nd quarter onas the effects of advance
investment become evident
16
Advance InvestmentMain Businesses and Subsidiaries that Carried Out
(¥ bn)
2.2
4.2
5.8
7.4
10.7
FY17/3Q1
FY18/3Q1
FY19/3Q1
FY16/3Q1
FY15/3Q1
*The RIZAP businesses:In addition to the RIZAP body making business,this also includes the RIZAP-related products and services
The RIZAP Businesses
Revenue broke through 10 billion yen
Revenue of the RIZAP Businesses
17
Advance InvestmentMain Businesses and Subsidiaries that Carried Out
The number of people waiting tripled
due to the effects of the TV CM
About 3 billion yen is scheduled to be
recorded from now on
(figures as of the end of June each year)
FY18/3 Q1
FY19/3 Q1
RIZAP Body MakingNo. of People Waiting
18
Leading Indicator 3Main Advance Investments of FY19/3 Q1 (1)
Cash
1. Sales records and cashincome do not occur duringthe period of waiting for a reservation
ReservationS
ale
s ・・・・・
1st time
Inquiry Payment
Cash
Sale
s
2nd time
3rd time
4th time
5th time
15th time
16th time
14th time
3. Recognition of sales for each session Case of 300,000 yen basic plan (16 times)
Session
2. Full payment after confirmation ofinitial reservation 300,000 yen (excluding joining fee)
Counselling Contract
About 2 months at major stores 19
(ref.) Image of Sales Recording
(about 20,000 yen)
Insta
lmen
t acco
un
ts
rece
ivab
le
Cash ・・・
1st time
Cash
Sale
s
2nd time
9th time
10th time
Differences occur between sales and cashflow
because about 40% of payments are by instalment
15th time
16th time(End)
・・・
24th timeInstalment payment
FinishAbout 2 months at major stores 20
1. Sales records and cashincome do not occur duringthe period of waiting for a reservation
3. Cash instalments are recorded each month (average of 24 months)
2. Recording of instalment accountsreceivable 300,000 yen(excluding joining fee)
ReservationInquiry Instalment contract
SessionCounselling Contract
(ref.) Image of Payment by Instalments
44 locations
New locations openings in FY19/3 Q1
This will contribute to each company’s revenues
from 2nd quarter on
The RIZAP businesses 12 studios
HAPiNS 15 stores
SD Entertainment 7 locations
JEANS MATE 3 stores
Maruko 3 stores
Wonder Corporation 2 stores
Idea International 2 stores
Total 44 stores
Expenses recorded in FY19/3 Q1 1.0 billion yen
No. of New Locations Openings by Group Companies
(increased store opening expenses, business commencement expenses, hiring expenses, personnel
expenses, etc.)
21
Main Advance Investments of FY19/3 Q1 (2)
22
Example of Store Reform
23
Example of Store Reform
24
Example of Store Reform
Segment Main business
Beauty andHealthcare
RIZAP-related business, health co-operation Maruko, Pado, Hokuto Printing, SYS, Gorin Packing, B&D, etc.
Apparel
Dream Vision, JEANS Mate,Marusho Hotta, Misuzu, Marimura,Auntie Rosa, etc.
Housing Related and
LifestyleIdea International, HAPiNS,Tatsumi Planning, etc.
Entertainment SD Entertainment,Nihonbungeisha, etc.
SegmentStrategic
positioningMain business
Beauty andHealthcare
Concentration of strategic
investment
RIZAP-related business, health co-operation, Maruko,SD Entertainment,B&D,Shonan Bellmare,* etc.
Lifestyle Strengthening of Group synergies
Dream Vision, JEANS Mate,Marusho Hotta, Misuzu, Marimura,Auntie Rosa, Idea International, HAPiNS,Tatsumi Planning, etc.
Platform
Strengthening of the common management
infrastructure of the Group
Wonder Corporation,*Pado, Nihonbungeisha,Sankei Living Shimbun,*SYS, Hokuto PrintingGorin Packing, etc.
New segmentsOld segments
* Wonder Corporation entered The Company Group on March 29, 2018, Sankei Living Shimbun entered The Company Group on March 30, 2018, and ShonanBellmare entered The Company Group on April 27, 2018
25
We will reorganize into segments corresponding to the future key strategies of The Company Group and aim for the certain achievement of the medium-term management plan.
Change in Segment
4.1
11.7
Beauty and Healthcare +4.2 billion yenIncreased revenue in the RIZAP businesses (+3.3bn) and the new consolidation of B&D, etc., were the main contributors
(JPY bn)
Platform +18.4 billion yenThe new consolidations of Wonder Corporation and Sankei Living, etc., contributed
Lifestyle +200 million yenThe new consolidation of Marusho Hotta and the increased revenues of Idea and Hotta were the main contributors
52.1
28.6
FY19/3 Q1
Revenue by Segment
Increased
in all segments
Adjusted amount
13.8
11.4
-0.7
18.0
22.5
-0.1
26
FY18/3 Q1
2.5
- 0.6
-1.9
- 1
-4
- 0.5
(¥ bn)
-3.7
2.7
Beauty and Healthcare -2.6 billion yenIncreased advertising expenses mainly for the RIZAP businesses and Maruko, etc. (-2.0bn)
Platform -200 million yenIncorporation of losses of Sankei Living and Pado, etc.
Lifestyle -3.1 billion yenRecorded reduced profit of Tatsumi Planning and in the 1st quarter of the previous term, the cheap purchasing gains of Marusho Hotta and Trecenti
Decrease under the impact of advance investment
Adjusted amount
Income or Loss by Segment
-0.8
-0
-0.3
0.7
27
FY19/3 Q1
FY18/3 Q1
As of June 30, 2018As of March 31, 2018
(¥ bn)
(Total assets 200.8 billion yen)(Total assets 174.3 billion yen)
Total equity
*Equity ratio = total equity / total liabilities and equity
Equity ratio 24.6%
138.3116.6
62.5
81.3
51.3
68.257.7
80.5
50.9
42.8
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity ratio 34.0%
Total equity
28
Strengthening the financial ground by fund procurement.
Consolidated Financial Position
FY19/3Full-year forecast
FY19/3 Q1 Rate of progress
Revenue 250.0 52.1 20.8%
Operating income or loss 23.0 -3.7 -
Net income attributable to owners of the parent 15.9 -3.0 -
(¥ bn)
Currently progressing as planned29
Although operating profit decreased temporarily due to advance investments, this was as planned
Results Forecast for FY2019/3 and Progress
Updates on Business
30
April 10, 2018
15th Anniversary of the Founding of RIZAP GROUP
31
Reconfirmation of the RIZAP Businesses Strategy
32
Japan’s first soymilk cookie diet was a hit
Provided a facial massager normally selling for 30,000 to
100,000 yen for 980 yen
A long-selling product with 10.5 million units shipped
since its launch
33
2003 - 2011
Planning, manufacture and sale of “products that produce self-esteem”
2012
Personal Training Gyms The Birth of RIZAP
34
2012
The Birth of Service “Committed to Results”
35
Services to this point RIZAP
Committed to results(full refund if results not produced)
Provision of service(expenses were incurred
regardless of results)
36
The RIZAP Strategy
<The strengths of RIZAP>
The ability to make customers do programs to
completion
(full refund if results not produced)
37
“Committed to results”
1:1Body
making
[1]
Expansion of 1:1 businessGolf, English, etc.
[2]
Expansion of 1:N businessEXPA, LIPTY, corporations,
local authorities, etc.
38
Expansion of service
“committed to results”
The World RIZAP is Aiming for
(1) Expansion of 1:1 Business
39
(1) Expansion of 1:1 Business
(full refund if results not produced)
Golf English Kids Cooking
Dance VoiceWomen Executives
etc.
40
Development of services
“Committed to results”
41
42
44
45
完全個室のマンツーマンだから
圧倒的に上達が早い。
46
47
(2) Expansion of 1:N Business
48
(2) Expansion of 1:N Business
(in principle, full refund if results not produced)Local
authorities
CorporationsHot yoga body making
Muscle diet studioCommitted to the health
issues of local authorities
Committed to the health issues of employees
49
Development of services
“committed to results”
Apply the 1:1 Service Method to 1:N Services
A system able to “commit to results”
The case of “EXPA,” the muscle diet studio for women
Group sessions(twice a week)
Initial goal settingcounselling (once a month)
Dietary guidance(once a week)
50
No. of EXPA Members
10 studiosdetermined
Studio openings this term in line with the top form of
the muscle diet studio
51
2017 2017 2018 2018 2018 2018 2018 2018
November December January February March April May June
1:N Services (1) EXPA *Changed name from VIVANA
Counselling is very popular
Hot Yoga Body Making Committed to Results
52
No. of LIPTY Members
2017 2018 2018 2018 2018 2018 2018
December January February March April May June
1:N Services (2) LIPTY
100,000
25,000
33,000
Triple420 companiesBroke through 30,000 people
Corporate Health Seminars by RIZAP Where People Can Learn
Diet and Exercise by Practice
53FY2018/3
No. of People Who Have Taken RIZAP Health Seminars
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
FY2019/3
1:N Services (3) Corporate Programs
Japan’s first “remuneration for results-type” health promotion program
1. Physical strength age of senior citizens
“10 years younger”
Remuneration decided by the number of people “10 years younger” due to the program
2. Reduction in medical expenses the year after
the program
Remuneration decided by the “reduction in medical expenses” of program participants
Both results are provisionally calculated, and the local authority pays remuneration to RIZAP,
whichever is higher
Efforts with Ina City, Nagano Prefecture (January to March 2018)
54
1:N Services (4) Local Authority Programs
“Efforts towards health promotion” with local authorities are expanding
• Kawakami Village, Nagano Prefecture (November 2018 - February 2019)
• Shimosuwa Town, Nagano Prefecture (August - November 2018)
• Tamakawa Village, Fukushima Prefecture (October - December 2018)
• Furudono Town, Fukushima Prefecture (September - November 2018)
• Minamisoma City, Fukushima Prefecture (January - March 2019)
• Kaminokuni Town, Hokkaido (September - November 2018)
Local authorities where efforts for health promotion / elimination of metabolic syndrome have been determined
55
(ref.) Efforts Newly Determined with 6 Local Authorities
2018 - Further Development
56
Full-scale development for healthcareMarket scale
40 trillion yen
400 billion yen
Fitness market
Healthcare market
57
Medical examinations
Towards a world of prevention and medicine, not just health promotion
58
Full-scale development for healthcare (orientation)
Nursing care
Preventative medicine
QOL improvements
Rehabilitation
Collaboration with insurance
59
Committed to people who shine in the era of the 100-Year Life
60
Reconfirmation of
the RIZAP Businesses Strategy
Until now
Lives lacking self-confidence
Lives filled with self-confidence
The RIZAP Group
Beauty
Lifestyle
Health
Fashion
61
Implementing M&A positively62
Platform (function axis)
Segments that realize self-investment (business axis)
Beauty and Healthcare Lifestyle
Technology Global SPA Customer base / marketing
63
RIZAP GROUP Segments
A platform that supports self-investment business
Platform (function axis)
Technology Global SPA Customer base / marketing
64
The Strengths of RIZAP GROUP
Systems, operations, etc.
Planning, marketingDevelopment,
production, distribution
System and management foundations
Store foundationsStrengthening of group publishing functions
For womenMarketing functions
EC foundations
Materials development
Overseas production bases
Gorin Packing
Contact centers
Health communications
Stores, EC
65
A Concentration of Specialty Companies
Community-based media Printing functions common to the Group
Horizontal development of advertising and marketing
Improvement of levels of recognition and brand power due to RIZAP-style advertising
66
Platform Effects (1)
Store reform and rebrandingTowards stores that are simple, easy to look at and easy to
understand for customers
JEANS Mate HAPiNS* Changed name from Passport Co., Ltd on August 1, 2018
67
Platform Effects (2)
Using Group companies’ customer reach to the maximum
Number of RIZAP Group stores
More than 1,200
Number of RIZAP Group customers
More than 10 million
68
Platform Effects (3)
e.g.: Purchasing until now
Group companies (81 companies)
Supplier companies
e.g.: Purchasing at present
Group companies (81 companies)
Supplier companies
Reductions in time, effort and costs due to switch to joint purchasing
69
Price negotiationsProposal
requestMaintenance request
Price negotiations
Platform Effects (4)
Realizing overwhelming price advantages due to joint purchasing
Speedy realization of products due to SPA
Various companies
(strategy, planning, development)
Global SPA New products(creation of new
value)
Systems
Inventories
Customer management / common points
Pu
rch
asin
g
Dis
tribu
tion
Sto
res, E
C
Pro
du
ctio
n Information
Commercial distribution
70
Platform Effects (5)
Procurement and SCM professional
Masayoshi Naito
RIZAP GROUP, Inc.Director, General Manager of Purchasing and Distribution Division
Wonder CorporationRepresentative Director, Chairman and President
Built the high revenue model from the time of the founding of Daiso to sales of hundreds of billions of yen.At the RIZAP Group, he has been responsible for increased profit rates and the restructuring of the Group’s distribution as a whole based on common purchasing by the Group as a whole.
Main career:Senior Managing Director, Daiso Industries Co., Ltd.
Apparel management and SPA professional
Kiyokazu Ikeuchi
Led the realization of the “SPARCS (Super Production Apparel Retail Customer Satisfaction) Concept,” a world SPA project and appointed Managing Director at the young age of 39 in 2001.Since 2003, he has been a pro manager in apparel and lifestyle business, serving in key positions at Shimachu, Point, Cox and Wego.
Main career:Director and Vice President, Wego Co., Ltd.Representative Director and President, Cox Co., Ltd.Director and Vice President, Shimachu Co., Ltd.Managing Director and COO, World Co., Ltd.
Misuzu Co., Ltd.
Representative Director, President
JEANS Mate Corporation
Director
Wonder Corporation
Director
71
(ref.) The Specialists Who Realize Global SPA
Creation of customer value based on AI + big data
Physical mall Virtual mall
Inventory unificationRecommendationsCommon pointsCRM
Purchasing history
Lifestyle habits
Clothes size
Age
Gender
Customer A
Self-actualization solutions matched to the customer• English conversation• Apparel• Diet, etc.
72
Platform Effects (6)
To fulfill the self-realization of customers throughout the world
73
To fulfill the self-actualization of customers throughout the world
Updates on the RIZAP Businesses
74
RIZAP Body Making
Broke through 100,000 peoplein February 2018
Number of Members (cumulative)(people)
2013January
2018July
116,000
75
16 23
56
89
135
172 over
Expanding studios and creating environmentsthat are easy for customers
to pass through
The RIZAP Businesses
Number of Studios (cumulative)
2018July
2017July
2016July
2015July
2014July
2013July 76
An continuation program that creates ideal bodies and brings improvements in lifestyle habits
Shape-up period
2 - 4 months
Style design period
Style design
period
Management
(maintenance) period
Management period(improvement of lifestyle habits)
Subsequent life
Body Management Program
Towards services together over a lifetime
77
Body Management Program (BMP)
RIZAP Customer Retention Rate(proportion who continue after
1 year from joining) Transitioning steadily to a lifestyle habits
improvement servicethat will continue across
lifetimes
2014Introductory
members
2015Introductory
members
2016Introductory
members
Full-term 2017Introductory
members (planned)
April to June 2017Introductory
members
・・・Full-scale
start of BMP
78
BMP development - retention rate -
10,600
2015September
2018June
Cumulative number of members
Broke through10,000 people
No. of RIZAP GOLF / RIZAP ENGLISH Members
(cumulative)
(people)
79
The number of RIZAP GOLF and RIZAP ENGLISH
is increasing
May 2018
44%
June July
100%100%100%
34%
25%Number of RIZAP body m-make inquiries
Number of RIZAP GOLF and ENGLISH inquiries
80
No. of RIZAP GOLF / ENGLISH Inquiries(if RIZAP Body Making is set at 100%)
“Offensive” and “Defensive” Management
81
The 3 main areas of defensive management
1. Strengthening of financial structure
2. Strengthening of corporate governance
3. Improvement of the Group’s collective capability
82
Use of proceedsAmount (¥ mil)
Payment schedule
(1) Growth investment in the RIZAP businesses 23,100 July 2018 - March 2021
(2) Strategic investment to build an integrated operational platform to enhance Group-wide synergy
6,100 July 2018 - March 2020
(3) Loan repayment to strengthen the financial position of the Company
6,245 July 2018 - March 2020
Paid-in amount:
Number of shares sold :
Dilution rate:
Offer price:
Overview
83
Procured funds of 35.5 billion yen by issuing new shares
Strengthening of Financial Structure
35,598 million yen (total for public offering and third-party allotment)
23,237,200 (including over-allotment, and 4,349,800 shares sold overseas, mainly in Europe and Asia)
9.1%
1,637 yen
84
Total Equity
Mar. 312017
Mar. 312018
Mar. 312018
(¥ bn) 68.2
Significant increase
with the issue of new shares
42.8
21.4
Strengthening of Financial Structure
85
Mar. 312017
Mar. 31 2018
Jun. 302018
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
22.4%
24.6%
Significant improvement
34.0%
*Equity ratio = total equity (net assets) / total liabilities and equity
*Jun. 30, 2018: Equity attributable to owners of the parent is 26.9%
Strengthening of Financial Structure
Equity Ratio
86
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
29.3%
18.2% Significant improvement
13.0%
Strengthening of Financial Structure
Goodwill to Equity Ratio
Mar. 312017
Mar. 31 2018
Jun. 302018
24.6
43.6
87
(¥ bn)
59.8
Significant improvement
Strengthening of Financial Structure
Mar. 312017
Mar. 31 2018
Jun. 302018
Cash and Cash Equivalent
88
15.8
32.5
14.1
Significant decreasedue to fund
procurement
Strengthening of Financial Structure
Interest-bearing Debt
Mar. 312017
Mar. 31 2018
Jun. 302018
(¥ bn)
*Net DE ratio = net debt / equity attributable to owners of the parent
(Times)
89
Improvement due to fund
procurement
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
0.7x
0.8x
0.2x
Strengthening of Financial Structure
Net DE Ratio
Mar. 312017
Mar. 31 2018
Jun. 302018
Net assets of company
subject to M&A
Acquisition cost¥0.5bn
¥1.5bn
¥0.5bn
¥1.0bn Negative goodwill
(image)
¥1.0bn
Case of independent
reconstruction
Losses could expand
¥0.4bn
Case of accelerated
management reorganization after entering The Company Group
¥-0.6bn
1st year 2nd year 3rd year 4th year
Net Assets of Company Subject to M&A
Impact on Operating Income (IFRS)
90
(ref.) Cases Where Negative Goodwill (NGW) Arise
¥-0.7bn
¥-1.0bn¥-1.2bn
(image)
¥0.8bn
¥1.2bn
Time of entry into the Group
91
Ideal: Grows steadily each year
Create profits steadily after M&A
to recover the investment steadily
Impact on PL
・・・
Actual Situation: Could also be impaired
If it is not possible for profits to grow,
impairment is possible in the future
Impact on PL
If results deteriorate, the risk of impairment may materialize in the future
・・・
Impairment
¥0.2bn
¥0.2bn
Net assets of company subject to
M&A
Purchase price
¥1.5bn
¥0.5bn¥0.5bn
Goodwill¥1.0bn
¥1.5bn
M&A subjectNet assets of
company
Purchase price
¥0.5bn¥0.5bn
(Ref.) Cases Where Goodwill Arise
¥0.4bn
¥0.6bn
¥0.8bn
¥0.4bn
¥-0.2bn
¥-0.4bn
¥-0.8bn
¥1.0bn
Chief Executive Officer
Takeshi Seto
1. Control of management
in general
2. Control of the RIZAP businesses
3. Formulation and execution of
strategy based on new
business development
(including M&A)
Akira Matsumoto
1. Control of business
execution in general
2. Control of all business
excluding the RIZAP business
3. Handling of various
management issues
92
New Post of COO and Scope of Authority
Strengthening of Corporate Governance
Chief Operating Officer
1. Full-scale development into the healthcare area
2. Full-scale development overseas
3. Retail strategy including RIZAP-brand functional food products, etc.
4. Strengthening and thorough implementation of compliance
5. Promotion of diversity
93
Strengthening of Corporate Governance
Five Management Issues Handled by the COO
Visits to companies by the COO
94
The RIZAP Group
M&A strategy - Basic concept
Self-investment
In related business areas
Have capital alliances that
“put us in the same
boat”
Appropriate prices
Purchase prices need to be appropriate
Dramatic growth
Made possible by Group synergies
95
21.8
Listed Group CompaniesTotal Market Capitalization
Day prior to announcement of capital and business alliances
Current(closing prices
as of August 10, 2018)
After entering the RIZAP Group
4.8 times
103.9
(¥ bn)
96
Increases in Corporate Value After Entering the Group
(¥ mil)FY18/3
Q1FY19/3
Q1Change Overview
Idea International
401 419 +18The company achieved record high revenue and operating income. The BRUNO hot plate broke through cumulative sales of 1 million units. Products in the MILESTO bag brand range are also selling well.
WonderCorporation 76 41 -35
The company saw decreased revenue and profit due to a slump in games and music CDs. It is promoting a turnaround to high revenue stores based on collaboration with RIZAP, HAPiNS and JEANS Mate.
Maruko 42 -425 -467
The company achieved increased revenue. The number of new store visit reservations increased by 39 times compared with the year before last due to the good performance of the new commercial, etc. The advance investment of the 1st quarter is forecast to be recovered at an early stage from the 1st quarter on.
JEANS Mate -70 195 +265
The company achieved increased revenue and operating income.Operating income returned to the black in the 1st quarter for the first time in 4 terms due to the progress of structural reform. The Ladies Division, currently being strengthened, saw double-digit growth (121% YoY)
*1
*2
*1 Because the company settles its accounts in June, the figures stated are the full-term figures for the term ending June 2017 and the term ending June 2018
*2 Because of a change to the account settlement period, the figures for the current term are for an irregular 13-month settlement period and those for the previous term are for the 3-month period from March to May, 2017
*3 Because the company changed its account settlement period during the fiscal year ending March 31, 2018, the figures shown for the previous term are for March 21 to June 20, 2017
*3
97
Operating Income of Listed Group Companies (1)
(¥ mil)FY18/3
Q1FY19/3
Q1Change Overview
HAPiNS 14 49 +34
The company achieved increased revenue and operating income. HAPiNSstores are trending well. The company opened 15 stores in the 1st quarter. It will continue to open stores positively from the 2nd quarter on too and is forecast to update its historic high for the number of stores at the end of this term (200 stores).
Dream Vision 756 -9 -765
The company achieved increased revenue. The core apparel business achieved increase in revenue and profit. It resolved non-consolidated insolvency in July. The temporary decrease in profit is forecast to recover from the 1st quarter on due to the structural reform of the jewelry business.
Marusho Hotta
-8 -27 -19
The company achieved increased revenue and profits in its designed twisted yarn business and a return to profitability in its kimono business.Profits decreased temporarily in the 1st quarter due to the structural reform of the couture business.
Pado -113 -242 -128
The company saw a decrease both in income and profits in the 1st quarter due to a decrease in the circulation of the media for households and advance investments for a switch to digital media.The company will rebuild its revenue foundations during this term by promoting the unified management of 5 media-related companies.
SDEntertainment -68 -64 +4
The company achieved increased revenue and operating income. While the company made advance investments in the day care business, it saw an increase in revenue and profits in the 1st quarter due to the improvement of profitability in its fitness business and entertainment business.
*1 The company changed name from Passport Co., Ltd to HAPiNS Co., Ltd from August 1, 2018*2 International accounting standards (IFRS)
*2
*1
98
Operating Income of Listed Group Companies (2)
99
-16-26
-70
Operating IncomeReturned to
operating incomein the 1st quarter
for the first time in four terms
• Sales at existing stores exceeded those for the previous year
for 12 months in a row
• The Ladies Division continued double-digit growth (121% YoY)
• Promoting the opening of new stores based on collaboration with Wonder Corporation
New store openings at WonderGOO’s Iruma Store and Honjo Store (June)
195
(¥ mil)
FY16/2Q1
FY17/2Q1
FY18/3Q1
FY19/3Q1
(entered the Group on February 20, 2017)JEANS Mate Corporation
Opening new stores in line with the popularity of “jM”
- New proposal-type concept shop offering “mix and match coordination” -
1. Morisia Tsudanuma store 2. COCOLIA Tama Center store
3. Venus Fort store 4. SHINSHIZUOKA cenova store
5. ALPARK(Hiroshima) store 6. FRESPO YASHIO store
Opened the new concept shop at 6 locations
100
101
Autumn 2018
JEANS Mate will announce a new concept brand
To realize high level “functionality,” “design” and “price competitiveness”
with the comprehensive power of the RIZAP Group
New concept brand for men New concept brand for women
-526
45
249
182
401
• BRUNO miscellaneous kitchen products are leading good results.The BRUNO hot plate broke through cumulative sales of 1 million units
• The travel goods brand “MILESTO” broke through annual sales of 1 billion yen. The company will aim for further growth of its bag business using synergies with Shicata Co.
BRUNO hot plateCumulative sales have
broken through 1 million units
The 1st overseas BRUNO store
opened in Taiwan(July 1, 2018)
(entered the Group on September 25, 2013)
Both revenue and operating income
are at historic highs
FY17/6 FY18/6FY15/6 FY16/6FY14/6
Strengthening of EC(2017 -)
• Entered the RIZAP Group(September 2013 -)
• Launched the BRUNO hot plate(March 2014 -)
(¥ mil)
419
FY13/6
Operating Income
Travel goods brandMILESTO
102
Idea International Co., Ltd.
Revenue increased and operating income decreased
due to the popularity of the new TV commercial but the production of core products delayed
• New store visit reservations are trending well due to the popularity of the new TV commercial
(new store visit reservations increased to 39 times the number
for the year before last)
• Significant profit increases are forecast for the 2nd quarter on due to advance investment in advertising expenses and delays in production of core products with strong reservations
New brand“Curvaceous”
Maruko’s new TV commercial(Broadcast nationwide from August 2)
Revenue
(¥ mil)
FY17/3Q1
FY18/3Q1
FY19/3Q1
4,059
3,398
2,675
-425
-690
42
Operating Income
103
(entered the Group on July 5, 2016)Maruko Corporation
(¥ mil)
FY17/3Q1
FY18/3Q1
FY19/3Q1
(entered the Group on May 27, 2016 and changed its name from Passport Co., Ltd on August 1, 2018)
FY19/3Q1
FY17/3Q1
FY18/3Q1
Operating Income
(¥ mil)
49
-381
14
Increased revenue and operating income
due to the popularity of “HAPiNS” stores
• Revenue is trending more than 10% above YoY
• Positive store openings inside WonderGOO stores
• The company plans to continue positive store openings from the 2nd quarter on too, including planning the development of gift-specializing shops, etc., for a total of 200 stores by the end of the term
Gift-specializing shop for all sorts of gift-giving situations
104
HAPiNS Co., Ltd
The forecast for the second quarter and onwards is for
the achievement of historically high profit in all quarters
(quarterly base)
Summary
105
Towards Achievement of “COMMIT 2020,” Our Medium-Term Management
Plan
106
Consolidated revenue Consolidated operating Income(¥ bn)
300.0
Listing
06 07 08 09 10 11 12 13 14 15 16 17 18 19 … 21Plan
35.0
06 7 08 09 10 11 12 13 14 15 16 17 18 19 … 21
95.2
136.2
10.2
13.5
Listing Plan
Fiscal year ending March 31, 2021 Plan
300 billion yen
Fiscal year ending March 31, 2021 Plan
35 billion yen
COMMIT2020
announced
39.1
2.1
Plan Plan
250.0
23.0
107
Towards Achievment of the Mid-Term Management Plan,“COMMIT 2020”
(¥ bn)
COMMIT2020
announced
1. Further strengthening of foundations for growth
2. Full-scale development into the healthcare business
3. Full-scale advance overseas
Basic strategy Future policies
• Acceleration of the growth of the RIZAP businesses and all Group companies
• Strategic investment in the sports area and food area
• Strengthening of M&A strategy along the business axis and function axis
• Towards the realization of the “10 million RIZAP People Health Declaration,” accelerate the growth of the health support area (full-scale growth of RIZAP for local authorities and corporations)
• Building of growth foundations centered on Asia
• Establishment of the global SPA model
108
Future Important Policies
Want to improve oneself
Want to be beautiful
Want to live longer
Want to live in a good house
Want to make a social contribution
Becoming the Global No.1 in Self-Investment Industry
Maslow's Hierarchy of Needs
self-actualization
Esteem needs
Belongingness and Love needs
Safety needs
Physiological needs
Outsidescope ofbusiness
RIZAP Group business domain
“Self-investment industry”
109
RIZAP GROUP Vision
110
Please watch the video
111
For all people to live a life during which they can feel their own value
Appendix.
112
Company name RIZAP GROUP, Inc.
Stock code 2928(Sapporo Securities Exchange’s Ambitious Market)
Establishment April 2003
Representative Takeshi Seto, Representative Director, President and CEO
Capital 16,927,570,000 yen
Number of shares outstanding 550,284,000 shares
Number of consolidated employees
7,063 people(excl. temporary employees) *As of March 2018
113
Company Overview (as of the end of June 2018)
The Potential of the Self-Investment Industry
* Source: Yano Research Institute Ltd., World Bank, IMF, SNA (National Accounting Manual)
* 7.4 times = Total GDP of G20 member states (excludes low income countries) / Japanese GDP
Healthcare / beauty
2 trillion yen - Golf1.4
trillion yen
Sports goods / wear
1.9 trillion yen
Other learning activities
950 billion yenEnglish
education310
billion yen
Business skill training
490 billion yen
Self-investment industry market
Domestic
Global
At least
50 trillion yen
Market scale of the self-investment industry
Sports classes
651 billion yen
Domestically 7 trillion yen, globally 50 trillion yen
114
Self-investment industry market
At least
7 trillion yen
Continue ROE (return on equity) Management
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3Q1
27.9%
*Up to FY16/3: Net income to equity ratio*FY17/3: net income to equity attributable to parent
company ratio
70.7%
27.1%
56.4%Average ROE over
the past 5 years 44.6%
-4.5%
40.7%
115
116
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listed Group companies
IR information of listed Group companies
RIZAP GROUP, Inc.
IR Information of Listed Group companies