earnings presentation fy2019 q1 - ir-english.rizapgroup.com€¦ · earnings presentation....

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


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


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


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


24


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”

43

https://www.rizap.jp/kids_lp01/

完全個室のマンツーマンだから

圧倒的に上達が早い。

46

(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


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


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


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


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


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


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%


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%


Goodwill to Equity Ratio

Mar. 312017

Mar. 31 2018

Jun. 302018

24.6

43.6

87

(¥ bn)

59.8

Significant improvement


Mar. 312017

Mar. 31 2018

Jun. 302018

Cash and Cash Equivalent

88

15.8

32.5

14.1

Significant decreasedue to fund

procurement


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


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

www.rizapgroup.com/ir/group/

Concentratedthe IR websites of

listed Group companies

IR information of listed Group companies

RIZAP GROUP, Inc.

IR Information of Listed Group companies

earnings presentation fy2019 q1 - ir-english.rizapgroup.com€¦ · earnings presentation....

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