ANNUAL REPORT 2017 Year Ended March 31, 2017

Year Ended March 31, 2016

TORIDOLL Holdings Corporation

Toridoll.corporation TORIDOLL Holdings Corporation ANNUAL REPORT 2017

We strive to maximize every customer’s pleasure while we are in contact with him or her, pursuing CONTENTS the highest possible value for all of them. All of us 02 Business lineup at Toridoll constantly meet the challenges of forging 04 Financial highlights ahead to reach a higher stage into the future. 06 Message from our president 07 Three values 08 Growth strategy of toridoll 18 Social initiatives 20 Corporate governance 22 Management discussion and analysis

24 Consolidated financial statements 28 Company outline 29 Investor information BUSINESS LINEUP We develop and expand a wide range of businesses to provide satisfaction to all customers

We utilize an open-kitchen concept at our restaurants where customers can see for themselves how our foods are prepared in a fun and exciting setting, featuring ‘‘handmade’’ items and ‘‘unmatchable freshness.’’ This represents our commitment to deliver satisfaction to customers in everything we do by maximizing their joy with each interaction. We do this through a unique dining experience focused on the concepts of “hospitality,” “handmade” and “freshly made.”

In particular, we have been actively expanding our self-service udon restaurant, MARUGAME SEIMEN, which attracts a wide range of customers of both sexes, young and old. The restaurants are popular with our customers.

GUIDE TO OUR BUSINESSES Japan

MARUGAME SEIMEN MARUSHOYA MAKINO

MARUGAME SEIMEN opened its first Japanese outlet, MARUGAME MARUGAME SEIMEN is by far the leading brand of its kind in Japan, A chain of ramen restaurants committed to the in-house production of This chain of restaurants specializes in a set tempura menu, making SEIMEN Kakogawa, in November 2000. Since then, the Company has with some 800 outlets nationwide. We opened Marukame Udon not just the noodles but other ingredients as well. Their extremely it a point to fry customer orders after they are placed, always serving expanded its network of self-service Sanuki udon restaurants Waikiki Shop, MARUGAME SEIMEN’s first overseas outlet in Hawaii in flavorful bowls of ramen are possible only because they are elaborately crisp, piping hot tempura. committed to serving the tastiness of genuine udon. All its outlets April 2011. Our non-Japanese operations have grown successfully; prepared all by hand. are equipped with noodle-making machines and make the best today we operate some 130 restaurants in 12 countries and regions possible dough for the day with carefully selected Japanese wheat. including Thailand, China, South Korea, Hong Kong, Russia, They also use the open kitchen concept, preparing customers’ Indonesia, Taiwan, Vietnam, Australia, Malaysia and Cambodia, orders right in front of them and presenting the “drama” of cooking. spreading the tastiness of Sanuki udon around the world. BUTAYA TONICHI KONA’S COFFEE

A restaurant chain specializing in katsu-don (pork cutlets over rice) A chain of Hawaiian-style coffee shops that feature Kona coffee from and tonteki (pork steak) known for the ultimate in savory and tender Hawaii drip-brewed one cup at a time, as well as fluffy pancakes. katsu-don TORIDOLL NAGATAHONJYOKEN pork. This restaurant chain is known for its featuring freshly deep fried pork cutlet enveloped with egg and special At these family-friendly, genuine charcoal-grilled yakitori restaurants, A chain of yakisoba restaurants, featuring medium-thick noodles warishita stock and its tonteki teishoku (set meal) featuring pork we skewer fresh pieces of chicken and carefully charbroil them. made in-house and rich flavorings typical of Kobe’s old town area. steak barbequed with special sauce.

Overseas

CRACKIN’ KITCHEN WOK TO WALK SHORYU TOKYO TABLE BOAT NOODLE

Supervised by Chef Takeshi Omae, a winner An Asian fast casual chain of restaurants Shoryu Ramen launched in November 2012 A Japanese restaurant chain in the United States serving authentic Serving casual foods popular for their convenience, tastiness and of Michelin stars for two consecutive years, operating mostly in Europe. Their updated and has been recommended in the Michelin Japanese dishes that Americans love, as well as non-Japanese visual pleasure, developed from small bowls of noodle soup that people this restaurant is located in Hawaii, the Thai street food is very popular. Guide 2014, 2015 and 2016. Shoryu Ramen foods, in a stylishly casual setting. working in the floating markets of Thailand ate regularly. resort of the world. specializes in Hakata tonkotsu ramen from the Hakata district of Fukuoka City on the southern island of Kyushu, Japan.

02 03 FINANCIAL (Millions of yen) 2013 2014 2014 2015 2016 2017 HIGHLIGHTS J-GAAP J-GAAP IFRS IFRS IFRS IFRS

Years ended March 31, 2016 For the year Total trading transactions ¥70,906 ¥78,318 ¥78,318 ¥87,294 ¥95,587 ¥101,779

Cost of sales 17,622 18,906 18,907 22,309 24,105 26,216

75,563 Overseas (Unit: Billions of yen) Gross profit 53,284 59,411 59,411 64,986 71,482 5.7%: ¥5.8 Others Selling, general and administrative expenses 46,238 54,396 54,342 58,605 62,347 66,280 6.3%: ¥6.4 NAGATAHONJYOKEN Operating profit 7,045 5,014 2,643 4,175 8,733 8,619 0.8%: ¥0.8 Profit for the year 3,247 849 978 2,011 5,242 5,585 Total trading transactions MARUSHOYA 1.0%: ¥1.0 ¥101.8 At year end ¥101.8 billion Total assets ¥45,105 ¥49,556 ¥52,885 ¥59,019 ¥57,793 ¥64,011 billion TORIDOLL Total equity 14,978 15,528 18,094 25,359 30,872 35,006 2.1%: ¥2.1

MARUGAME SEIMEN 84.1%: ¥85.6 Per share data (Yen) EPS ¥82.70 ¥21.60 ¥24.81 ¥48.84 ¥120.56 ¥129.89

BPS 375.71 388.03 459.94 586.10 692.48 788.44

26.00 1,200 Cash dividends 16.50 8.00 8.00 10.00 24.00 MARUGAME SEIMEN 1,000 Others Major indicators 800 53.4% Number of stores Equity ratio (%) 32.7% 30.8% 34.2% 42.9% 51.9% 600 ROE (%) 24.4 5.7 5.5 9.1 18.9 17.5 1,211 PER (%) 11.5 45.4 39.5 34.1 18.8 18.6 400 stores Payout ratio (%) 20.0 37.0 32.3 20.5 19.9 20.0 200

Note: The Company Group has applied International Financial Reporting Standards (IFRS) starting from the consolidated 0 year ended March 31, 2015. Figure for the previous year is also disclosed adhering to IFRS. 2011 2012 2013 2014 2015 2016 2017

04 05 MESSAGE THREE VALUES FROM OUR PRESIDENT Value Delicious taste transcends national borders A One-of-a-Kind Restaurant Chain Where the Food is Handmade and Served Fresh Toridoll was established based on a passion We emphasize delicious handmade and freshly prepared for food. An aroma that whets your appetite, meals. Today, the food industry is constantly trying to make the handcrafted work of a master chef, and itself more efficient, but we pride ourselves in preparing food the heat of the open kitchen as food is prep- in front of our customers, even if it may seem inefficient, and ared in front of your eyes—this shows that in preserving a setting where food is always made fresh. This delicious taste is experienced not only from makes our customers want to keep coming back. the tongue but also by each of the five senses. We want to bring this passion for food to as many customers as possible. This has formed our commitment and approach to every new restaurant opening, with our Pleasure mission being to spread this passion to every corner of the globe. Food Entertainment without

With every bite, we want to make our the Central Kitchen Concept customers smile and think, “This is delici- We employ an open kitchen concept at our restaurants to ous!” Even if we do not speak the same deliver delicious handmade and freshly prepared meals, and language, our passion is conveyed in the to share the excitement of food preparation with our form of customer smiles. customers. The realistic setting of food prepared in front of We want to be a company that takes pride your eyes connects our kitchen staff with customers, and continually in this set of values. As we serves as a form of entertainment similar to theater. expand internationally, we will deliver hospitality that is second to none and respect the culture and regional differences of each country. Our goal is to become a leading food-service company that originated in Global Japan. Countless international markets and the future await us. Sharing Our Passion for Food with the World

Takaya Awata We deliver world-class Japanese hospitality and pride President, Toridoll Corporation ourselves on handmade and freshly prepared food. This is why we follow a business format that takes into consideration the local culture, as well as regional uniqueness in the countries and regions where we operate. Our goal is to be a leading food-service company recognized around the world, by creating restaurants that are continually loved by the local community.

06 07 MARUGAME SEIMEN: GROWTH STRATEGY On the Way to Being the No.1 Brand OF TORIDOLL Difference in growth speed of competitors’ brands and MARUGAME SEIMEN (total trading transactions) ¥101.8

Toridoll’s growth trajectory (Millions of yen) 80,000 billion The Company takes pride in serving delicious meals that are handmade and freshly prepared as well as MARUGAME SEIMEN delivering a dining experience and hospitality that will make customers want to come back again and again. In 60,000 Competitor A Competitor B the three decades since our founding, we have grown into a group of companies that operates more than 1,200 Competitor C restaurants in 27 countries and regions around the world. 40,000

20,000 (Millions of yen) 334 100,000 Nov. 2000 MARUGAME SEIMEN: Opened first restaurant (in Kakogawa) 0 2006 2008 2010 2012 2014 Feb.2006 Listed shares on the Tokyo Stock Exchange (TSE) Mothers Index. 243 Dec.2008 Moved listing to the First Section of the TSE 80,000

Apr.2011 Opened first restaurant outside of Japan, in Hawaii Total trading transactions 102 Apr.2013 Acquired Dream Dining Corporation, a restaurant business company in USA and Hong Kong, 61 and made it a Group company. 60,000 Number of restaurants in Japan 877 Jun.2015 Acquired Wok to Walk Franchise B.V., a restaurant company that develops and operates 22 847 848 849 Wok to Walk Asian fast food restaurants in Europe, and made it a Group company. Reached 1,000 restaurants worldwide under the TORIDOLL Group. Number of restaurants 762 outside Japan 40,000 Feb.2016 Acquired Utara 5 Food and Beverage Sdn. Bhd., a restaurant company that develops and 4 operates Boat Noodle restaurants in Malaysia, and made it a Group company. 629 May.2016 Acquired 100% of the shares of the Sonoko Group which develops and operates beauty & 519 health products/shops under the lifestyle brand Sonoko, and made it a Group company. 20,000

403

285

190 Our beginning 132 87 39 56 15 22 26 0 1985 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 *Figures for fiscal 2014 and fiscal 2015 represent net income attributable to owners of the parent company, while International Financial Reporting Standards has been introduced from fiscal 2015.

From 2003: Pursued a diversified Began actively pursuing M&A opportunities, From 1985: Began operations, expanding primarily From 2007: Expanded MARUGAME SEIMEN using roadside restaurants food court strategy focused 2015 - in addition to expanding both inside 1985 - around TORIDOLL (yakitori family dining) brand 2003 - 2007 - and began international expansion on MARUGAME SEIMEN and outside Japan

08 09 GROWTH STRATEGY OF TORIDOLL BUSINESS EXPANSION Development of new business model (BUTAYA TONICHI) Since its launch in 2015, the BUTAYA TONICHI brand has steadily expanded its network to 22 outlets. Despite being a segment with high added-value delivering homemade and freshly made menu items, BUTAYA TONICHI still offers a great low price. We are now opening up new markets as a restaurant chain specializing intonkatsu IN JAPAN (deep fried pork cutlets) and tonteki (pork steak), setting ourselves apart from other fast food restaurant chains focused on katsu-don (pork cutlets over rice) and tonkatsu teishoku (set meals). Strengthening our operating base in Japan and developing/expanding new business models BUTAYA TONICHI Same - restaurant sales at our core MARUGAME SEIMEN brand remained strong, while we also developed and expanded new business models. We will now further reinforce our operating base in Japan to establish a rock-solid business structure.

(Unit: millions of yen) Sales keep increasing 5,400 for 31 months 5,300

5,200

5,100

5,000

4,900

4,800

4,700 Moving average for 12 months of Existing Restaurants 4,600 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2014 2015 2016 2017 * Calculations are based on the existing restaurants at the end of March 2014.

High quality To capture cus- tomers'needs in To capture the dining Tonkatsu,Tempura Specialty store econmic defla- out needs mainly for ¥1,500 ~ tion or costsen- families sitivites

Low price High price

To capture cus- Katsudon tomers'needs for , tempura something new FF ¥500 ~ 700 petit-sumptuous

Casual

10 11 GROWTH STRATEGY OF TORIDOLL ASPIRING TO Toridoll’s unique approach to global growth With the Japanese population gradually decreasing , many Japanese food service companies have elected to expand overseas, but these companies tend to apply a Japanese business model to international markets.

BECOME THE WORLD’S For this reason, they end up expanding primarily in Asia because food preferences there are similar to their MOST INNOVATIVE, home market. GLOBAL FOOD-SERVICE Regional Sales of Food Service Companies COMPANY Japanese companies Top multinational companies Japan North America International (mainly Asia) Europe Toridoll launched its global expansion at an early stage ［%］ ［%］ Others (2014) 100 100 7.9% 16.4% 17.5% 14.3% 27.8% 25.4% Having established a stable operating base and continuous growth in Japan, Toridoll opened its very first 80 80 44.9% 22.8% international location in Hawaii back in April 2011. Since then, we have expanded our operations to a number of 8.6% other countries around the world. 60 60 30.2% Our Hawaii location became a huge hit, with higher sales than any of our restaurants in Japan. In light of this 92.1% 12.4% 40 83.6% 82.5% 40 success, we accelerated our worldwide expansion with the decision to open restaurants in China, South Korea 62.9% 66.0% and Thailand that same year. 20 20 42.0% 42.6%

0 0 Competitor A Competitor B Competitor C McDonald’s Yum! Brands Restaurant Brand Starbucks Corp Inc International Inc Corp

Source: Created by the Industry Research Division of Mizuho Bank basedon Euromonitor data and the most recent financial results information of each company.

RUSSIA EUROPE Initially, Toridoll had the same mentality—we wanted to expand our successful MARUGAME SEIMEN franchise KOREA US MAIN LAND from Japan directly to the rest of the world. However, we faced a very dicult task because conditions in each JAPAN country varied so greatly. We soon realized that the key to success was localization, thus we incorporated this CHINA TAIWAN mentality into our approach. SAUDI ARABIA THAILAND VIETNAM HAWAII COLOMBIA AFRICA MALAYSIA During our expansion, we discovered that the most efficient and rational approach was to develop a business ECUADOR INDONESIA model suited to each country (or to acquire one through M&A) and then expand locally. This led to a shift in our approach that we believe represents the correct recipe for international success.

AUSTRALIA 0 2000 4000 Varying business models tailored Km Localization Scale at the equator to the needs of each country and region

12 13 GROWTH STRATEGY OF TORIDOLL

M&A: Acquiring companies and businesses worldwide Volume zone: Pursuit of popularity and familiarity

that form the heart of our portfolio The average spend per customer at MARUGAME SEIMEN, our mainstay brand in Japan, is around ¥550. The foods served there appeal to the masses, and our goal with MARUGAME SEIMEN has always been to operate To quickly expand in into every country and region, we localize offerings to the local palette within the confines of restaurants targeting the volume zone, or where a meal can be enjoyed for a single coin. our existing businesses, and at the same time in recent years we have actively pursued M&A. Today, our recipe for global expansion includes acquiring small chain operators who have been successful in their own markets and This same philosophy applies to MARUGAME SEIMEN outside of Japan, but customer spending tends to be higher then adding the “missing ingredient” for growth. than in Japan because patrons differ from those in Japan. This is why we acquired Boat Noodle, which enables us to focus more on the volume zone. Going forward, we will continue to expand our portfolio, with targets for M&A including even Japanese restaurants that have captured the attention of consumers in their markets. The average spend per customer at Boat Noodle is around ¥450, a price point that appeals to those in the newly emerging middle class. Joined the Toridoll Group in June 2015 following its acquisition Aquired by the Toridoll Group in February 2016

WOK TO WALK Asian fast food offering a modern take on Thai street food Boat Noodle A noodle chain based in Malaysia

Thai cuisine is the best tasting food in the world ・ Winning over the newly emerging middle class, which has increased sharply in Asia’s emerging countries Thai cuisine is very popular around the world, so much so that its dishes ranked first and eighth in the “World's 50 ・ Developing new Islamic markets in Southeast Asia and the Middle East most delicious foods”（ CNN Go）.

Appealing to consumers Steep increase from the sharply increasing new middle class in Muslim population worldwide

Number of households by total disposable income in 12 countries ・ There are already more than 1.6 billion Muslims around the world. in Asia and emerging countries ・ By 2030, this number will increase to 2.2 billion, representing a vast market for food services, accounting for 26.4% of the world’s population. Blending Thai street food with European (Millions of US $500 ~ US $2,499 US $2,500 ~ US $4,999 and North American food trends households) US $5,000 ~ US $34,999 US $15,000 ~ Muslims as a Share of World Population,1990-2030 1,800 1,722 1,634 Non-Muslims WOK TO WALK is an Asian fast food chain of 78 restaurants in 15 1,600 1,536 (Billions) Muslims 1,423 1,400 countries, mainly in Europe, serving pan-fried noodles, fried rice and 1,293 256 397 549 8 1,269 144 1,200 117 stir-fried vegetables. Inspired by Thailand’s street food, each 97 6 1,000 restaurant delivers freshly cooked Asian food with a modern and 6.1B 622 5.8B Western flair. 800 704 915 997 4 5.3B 1,051 4.8B 600 326 1,080 4.2B 299 400 243 2 191 224 200 178 126 2.2B 26.4% of world 121 92 67 1.3B 1.6B 23.4% 1.9B 24.9% population will be Muslim Customers choose their 59 1.1B 19.9% 21.6% 0 26 0 own ingredients to suit their taste 2009 2010 2015[e] 2020[e] 2025[e] 2030[e] 1990 2000 2010 2020 2030 One of the reasons for WOK TO WALK’s popularity is that customers Source: Created by the Industry Research Division of Mizuho Source: http://www.pewforum.org/2011/01/27/the-future-of-the- get to choose their own ingredients, and then they get to watch as Bank based on Euromonitor International data. global-muslim-population/ their selection of noodles, rice, vegetables, toppings and sauce is cooked in a wok. This form of food entertainment, as you watch your own food being cooked is another reason for WOK TO WALK’s popularity. Boat Noodle is also very popular among Muslims and has obtained Halal certification, which will underpin its future expansion into Islamic countries with a market of some two billion people, representing the world’s largest volume zone.

14 15 GROWTH STRATEGY OF TORIDOLL

Successful at expanding quickly and turning a profit globally Toridoll’s multi-portfolio strategy We have expanded operations into multiple countries simultaneously to ensure our global expansion matches the speed of growth in each individual country. We have never been afraid of failure and always tackled ■ Develop new markets in regions around the world challenges, which has enabled us to undergo a range of learning experiences over a short period of time. ■ Accommodate the food culture and tastes of consumers in each country/region ■ Localize business models in each area and appeal to the masses As time has passed, we have also been able to build a solid network for flexible expansion while building up ■ Do not rely on one business model; instead, use a range of business models tailored to local needs critical expertise. Today, we are using this expertise, which has made it possible for us to quickly grow small chains incorporated into the Toridoll Group.

Original Quick expansion Accumulation of expertise thought globally and development of networks

Harnessing these strengths, we have opened more than 330 restaurants in 27 countries in the space of only six years. We have also turned a profit in our overseas business at an early stage.

Overseas business segment profits

(Millions of yen) Aim to reach 6,000 restaurants world wide by 2025 500 JAPAN 2,000 stores NORTH AMERICA 1,500 stores EUROPE & MIDDLE EAST 500 stores ASIA 1,000 stores SOUTH AMERICA 500 stores AFRICA 500 stores 400 Turned 363

300 a profit 271

*For Taiwan, revenue increased 200 by 712 million yen and profits by 165 million yen because of a 500 bill yen 100 43 FY2014 FY2015 15-month provisional settle- 0 ment for the year ended March 2Q End of End of FY2016 FY2016 FY2017 31, 2016. The graph above Overseas business shows these figures converted Overseas business 4,000 stores into a 12-month settlement New domestic businesses 290 bill yen -620 period. Existing domestic businesses New domestic businesses

900 stores 100 bill yen Aspiring to be a world leading food service brand 101.8 bill yen with 6,000 restaurants worldwide by 2025 Existing domestic businesses 1,100 stores 110 bill yen We will continue to emphasize and pass down our mission of serving food that is handmade and freshly prepared and creating a theatrical atmosphere. At the same time, we will actively incorporate new resources 2017 2025 through M&A and other means to develop powerfully localized business models in each country around the world under a multi-portfolio strategy that seeks to realize speedy global growth. Through this process, we will continue to grow into one of the world’s most innovative global food-service companies.

16 17 As a company to serve people with delicious meals, TORIDOLL has a vision of improving the world through food services. Based on this vision, TORIDOLL is engaged in a number of social contribution activities centering on food SOCIAL INITIATIVES education and financial donations.

One yen per bowl donated, creating smiles all around

Marugame udon class Since its start in 2012, 831 sessions for 11,529 participants

Handmaking udon with children MARUGAME SEIMEN has donated for a number of of Toridoll Corporation, visited Myanmar. He had an We host an udon (Japanese wheat noodles) handmaking years one yen per bowl of its kamaage (straight-from- opportunity to visit a Buddhist temple there and class for elementary-school children at our restaurants nation- the-pot) udon, the company’s specialty, sold within learned that the local school construction efforts wide in Japan, helping educate the young ones, who are our Japan to the children of developing countries to help were set back due to insufficient funds. Trying to think future, on food. Students attending the class learn all process- cover their school lunch cost. Beginning in October what Toridoll could do to help, Awata came up with es of handmaking udon from kneading wheat dough to boiling 2015, the Company has also invited its employees to the idea of offering help as the Toridoll School the noodles so that they will experience freshly handmade assist in the construction of schools in Myanmar, as Project. MARUGAME SEIMEN supports Myanmar’s udon, the characteristic of MARUGAME SEIMEN, one of our well as interacting with local children—a direct form endeavor to provide its children with education to group companies. The class provides a truly valuable opportu- of aid as part of the Company’s effort to help raise help ensure their—and their nation’s—bright future nity for us to see the children’s smiles and serious looks as funds for school construcion in that country. This through its kamaage udon and its customers’ goodwill. they learn how to make the noodles. company project began as Takaya Awata, President

18 19 Risk Management Structure The Company has established Risk Management of Association or other reasons are detected, to as- Regulations and the Risk Management Committee, certain the facts. The chair then issues instructions chaired by the president, to comprehensively identify on countermeasures and asks the applicable busi- CORPORATE ness division(s) to report on the details of the risks and evaluate risks concerning the execution of business and to respond to these risks appropriately. and the extent of the loss that might result.

GOVERNANCE The chair of the Risk Management Committee con- The Internal Audit Office periodically audits the head venes the committee whenever risks associated office divisions and restaurants to ensure that risks with financial loss due to changes in the manage- are quickly identified and reported to the president, Corporate governance structure ment environment, violations of the law or Articles who is responsible for all business operations.

For the foreseeable future, the Company will maintain a small, seven-member Board of Directors (including three outside directors) to ensure agility and quick decision-making Regulations. The Board of Directors aims to achieve transparency in corporate management, disclose information in a timely manner and always maximize corporate value for stakeholders.

As a result of this resolution, the Company will grant directors who are members of the Audit and Supervisory Committee voting rights at board meetings to further strengthen the Company’ s audit and supervisory functions General shareholders’ meeting as well as the corporate governance structure. General shareholders’ meeting

Appointment/ Appointment/ Appointment/ Appointment/ Dismissal Dismissal Dismissal Dismissal

Overview of each organization Cooperation/ Board of Directors principle and at other times when necessary to discuss Collaboration Audit The Company’s Board of Directors meets monthly in material matters in accordance with the laws, Articles Executive directors Audit and Supervisory Committee Cooperation/ Accounting auditor (Three directors, of whom three are principle and at other times when necessary to decide of Association, Audit and Supervisory Committee (Four directors) Audit Collaboration (audit firm) Executive directors Audit andoutside Supervisory directors) Committee Accounting auditor on important business matters and to supervise the Regulations and other company rules. (Three directors, of whom three are (Three directors) outside directors) (audit firm) performance of duties by the directors in accordance Directors with the law, Articles of Association, Board of Directors Internal Audit Office (Seven directors) Board of Directors Operating audits Regulations and other company rules. The Company has established the Internal Audit (Six directors) Accounting audits Selection/ Selection/ Cooperation/ Office, which reports directly to the president. This Cooperation/ Retirement Retirement Collaboration Collaboration Audit and Supervisory Committee office carries out reviews and assessments, from an Accounting audits The Company’s Audit and Supervisory Committee independent position, on the appropriateness and Cooperation/ Selection/ InstructionsCooperation/ Collaboration audits independently the duties of the directors. effectiveness of the Company Group’s internal con- Retirement Collaboration trols in accordance with the Company’s management President Internal Audit Office Report The Audit and Supervisory Committee meets regular- policy. Internal audit ly with the president to exchange opinions. When Through proposals for improvement based on these Report necessary, the committee communicates and shares results, the Company strives to continuously improve Instructions Operating audits/ Accounting Internal audit information with other directors, corporate auditors the soundness and efficiency of its corporate man- Accounting audits audits President Internal Audit Office Business divisions of subsidiaries (or people who hold a similar posi- agement. The Internal Audit Office conducts internal Report tion), the general manager of the Internal Audit Office audits of subsidiaries when necessary in accordance Executive Officer Business divisions Instructions/ and the accounting auditor, to ensure the effective- with the Internal Audit Regulations and reports the Control ness of its audits. This committee meets monthly in results of these audits to the president.

20 21 end of the fiscal year under review to 17. including 108 franchise restaurants, while 32 restaurants were closed, including 28 franchise restaurants. This MANAGEMENT Consequently, revenue fell 8.2% year on year to ¥2,148 brought the consolidated number of restaurants in million, but segment profit increased 12.8% to ¥176 million. operation at the end of the fiscal year under review to 334, including 289 franchise restaurants. MARUSHOYA (ramen restaurants) One restaurant was closed under the MARUSHOYA brand, As a result, revenue fell 6.9% year on year to ¥5,826 DISCUSSION & bringing the consolidated number of restaurants in million, and segment profit dropped 16.7% to ¥363 million, operation at the end of the fiscal year under review to 12. marking a substantial decline in revenue and profit compared with the previous year. As a result, MARUSHOYA revenue increased 0.3% year on ANALYSIS year to ¥992 million, while segment profit declined 3.3% to Others ¥114 million. For Other restaurants, 33 restaurants were opened, including one franchise restaurant, while five restaurants Business performance NAGATAHONJYOKEN (yakisoba restaurants) were closed. This resulted in a consolidated total of 59 One restaurant was closed under the NAGATAHONJYOKEN restaurants in operation at the end of the fiscal year under During the consolidated fiscal year under review, Japan’s Regarding the Company’s business performance during the brand, bringing the consolidated number of restaurants in review, including two franchise restaurants. economy experienced a gradual recovery as government fiscal year under review, consolidated total trading trans- operation at the end of the fiscal year under review to 11. stimulus and monetary easing by the Bank of Japan helped actions continued to see robust growth, increasing 6.5% The Others category includes the restaurant brands, to improve corporate earnings and the employment year on year to ¥101,779 million. Operating profit declined Consequently, NAGATAHONJYOKEN revenue fell 10.3% year Makino, Kona’s Coffee, BUTAYA TONICHI, and SONOKO, situation. However, some economic uncertainty remains, 1.3% to ¥8,619 million and profit before tax increased 4.3% on year to ¥766 million, and segment profit dropped 18.5% to among others. as financial markets experienced volatility due to Brexit to ¥8,466 million. Profit for the year attributable to owners ¥64 million. and the inauguration of a new administration in the United of the parent company totaled ¥5,631 million, up 8.0% year Consequently, revenue jumped by 136.4% year on year to States, among other factors. on year. Overseas Business ¥6,449 million, but a segment loss of ¥256 million was realized compared with a segment loss of ¥296 million in Outside of Japan, 123 new restaurants were opened, The food service industry saw a second consecutive year of Additionally, EBITDA increased 3.5% year on year to ¥12,167 the previous year. increased overall annual sales, despite a slump in August, million, while adjusted EBITDA rose 1.1% year on year to a result of the Rio de Janeiro Olympics as well as typhoons ¥12,934 million (Note2). Analysis of Financial Condition and other bad weather. Sales have increased for seven consecutive months, or since September 2016. Notes: Assets Liabilities/Equity

1. Restaurants other than those directly owned and operated by Total consolidated assets at the end of the fiscal year Total liabilities increased ¥2,084 million, compared with Given this environment, the Group pursued a management the Company or its subsidiaries are referred to as franchise under review increased ¥6,218 million, compared with the end of the previous fiscal year, to ¥29,005 million. policy that emphasizes earnings. In Japan, the Company restaurants. the end of the previous fiscal year, to ¥64,011 million. The This change was mainly due to increases in trade and worked to boost earnings by improving customer satisfac- 2. The Group now discloses EBITDA and adjusted EBITDA starting main reason for this change was increases in cash and other payables and long-term loans payable of ¥1,225 tion and raising visibility through proactive product promo- with the current fiscal year under review as useful comparative cash equivalents, trade and other receivables, intangible million and ¥1,203 million, respectively, compared with tions and a nationwide TV ad campaign, among other information for the Group’s performance. assets and goodwill, and investments accounted for the end of the previous fiscal year, while income taxes initiatives. EBITDA excludes the effects of non-cash expenditure items using the equity method of ¥1,088 million, ¥1,514 million, payable declined by ¥732 million. (depreciation and amortization, etc.) from operating profit. In ¥2,034 million, and ¥1,578 million, respectively. Outside Japan, the Company continued with M&As and new addition, adjusted EBITDA excludes the effects of impairment Total equity increased ¥4,134 million, compared with the restaurant openings, but also closed unprofitable ones, losses and extraordinary expenses (advisory fees concerning stock acquisitions, etc.) from EBITDA. EBITDA and adjusted end of the previous fiscal year, to ¥35,006 million, due to with an eye on markets in countries where the Company EBITDA are calculated as follows. an increase in retained earnings and other factors. does business, which helped to improve the profitability of ・EBITDA = Operating profit + Other operating expenses – Other overseas businesses. operating income + Depreciation and amortization Adjusted EBITDA = EBITDA + Impairment losses + Extraordinary ・ expenses Cash flows During the fiscal year under review, the Company opened seven new MARUGAME SEIMEN restaurants and 33 other The consolidated balance of cash and cash equivalents (here- year to ¥8,769 million. This was mainly attributable to expen- outlets after working to expand into new business areas, udon MARUGAME SEIMEN (self-serve restaurants) after, “cash”) at the end of the fiscal year under review ditures for the purchase of property, plant and equipment of such as cafés. Under the MARUGAME SEIMEN brand, we opened seven increased ¥1,088 million, compared with the end of the previ- ¥3,492 million, expenditures for the purchase of shares of

new restaurants, including one roadside restaurant and six ous fiscal year, to ¥11,183 million, a year-on-year increase subsidiaries resulting in a change in the scope of consolidation Outside of Japan, the Company continued an aggressive restaurants inside shopping malls. Four restaurants were of 10.8%. of ¥2,787 million, and expenditures for the purchase of invest- expansion, while also emphasizing profitability, by opening closed, bringing the total number of restaurants in ments accounted for using the equity method of ¥1,812 15 new directly owned outlets. For franchises and other operation at the end of the fiscal year under review to 778. Cash Flow from Operating Activities million. restaurants (Note1), the Company expanded operations by opening 108 outlets. Cash obtained from operating activities totaled ¥9,743 As a result, MARUGAME SEIMEN revenue increased 3.9% Cash Flow from Financing Activities million, up 13.6% from the previous fiscal year. This was year on year to ¥85,598 million, and segment profit rose As a result, the number of restaurants operated by the mainly attributable to profit before tax of ¥8,466 million Cash gained from financing activities totaled ¥102 million, 5.6% to ¥13,674 million. Group at the end of the consolidated fiscal year under and depreciation and amortization of ¥3,557 million, while compared with an outflow of ¥7,324 million in the previous review increased by 119 year on year (of which 81 were income taxes paid totaled ¥3,200 million. year. This was mainly attributable to proceeds from long-term TORIDOLL (yakitori family restaurants) franchise restaurants) to 1,211 restaurants (of which 291 loans payable of ¥7,200 million as well as expenditures for the were franchise restaurants). The TORIDOLL brand saw one restaurant closure, bringing Cash Flow from Investing Activities repayments of long-term loans payable of ¥5,885 million, and the consolidated number of restaurants in operation at the Cash used in investing activities increased 41.6% year on cash dividends paid of ¥1,039 million.

22 23 Consolidated financial statements

Consolidated statements of financial position (Millions of yen) Consolidated statements of income (Millions of yen)

Year ended Year ended As of March 31, 2016 As of March 31, 2017 March 31, 2016 March 31, 2017

Assets Total trading transactions ¥95,587 ¥101,779 Current assets Cost of sales (24,105) (26,216) Cash and cash equivalents ¥10,094 ¥11,183 Gross profit 71,482 75,563 Trade and other receivables 2,183 3,697 Selling, general and administrative expenses (62,347) (66,280) Inventories 265 585 Impairment loss (905) (673) Other current assets 1,138 1,242 523 Total current assets 13,680 16,706 Other operating income 860 Non-current assets Other operating expenses (357) (514) Property, plant and equipment 24,216 23,972 Operating profit 8,733 8,619 Intangible assets and goodwill 4,066 6,100 Finance income 155 177 Investments accounted for using the equity method 2,483 4,061 Finance costs (766) (339) 10,307 Other financial assets 10,144 Finance income (costs), net (611) (162) Deferred tax assets 1,824 1,629 Share of profit (loss) of investments accounted for using the equity method (5) 9 Other non-current assets 1,380 1,236 Profit before tax 8,117 8,466 Total non-current assets 44,113 47,305 Income tax expense (2,875) (2,881) Total assets ¥57,793 ¥64,011 Profit for the year 5,242 5,585 Liabilities Current liabilities Profit for the year attributable to Trade and other payable ¥5,642 ¥6,867 Owners of the parent 5,212 5,631 24 Short-term loans payable 25 Non-controlling interests 30 (46) Current portion of long-term loans payable 5,055 5,167 Profit for the year ¥5,242 ¥5,585 Lease obligations 246 244 Income taxes payable 2,072 1,340 Earnings per share attributable to owners of the parent (yen) Provisions 432 424 ¥129.89 Other current liabilities 2,331 2,397 Basic earnings per share ¥120.56 Total current liabilities 15,804 16,464 Diluted earnings per share 120.20 129.29 Non-current liabilities Long-term loans payable ¥5,385 ¥6,588 Lease obligations 3,902 3,684 Consolidated statements of comprehensive income (Millions of yen) Provisions 1,097 1,188 Deferred tax liabilities 689 963 119 Year ended Year ended Other non-current liabilities 43 March 31, 2016 March 31, 2017 Total non-current liabilities 11,117 12,541 Total liabilities 26,921 29,005 Profit for the year ¥5,242 ¥5,585 Equity Other comprehensive income Equity attributable to owners of the parent Items that may be reclassified to profit or loss Capital stock ¥3,907 ¥3,975 Exchange differences on translating foreign operations (275) (250) Capital surplus 3,947 4,007 Share of other comprehensive income of investments accounted for Retained earnings 21,219 25,813 (84) (348) using the equity method Treasury shares (0) (0) Other comprehensive income (359) (598) Other components of equity 916 408 Comprehensive income for the year ¥4,883 ¥4,987 Total equity attributable to owners of the parent 29,989 34,203 Non-controlling interests 883 804 Comprehensive income for the year attributable to Total equity 30,872 35,006 Owners of the parent ¥4,889 ¥5,086 Total liabilities and equity ¥57,793 ¥64,011 Non-controlling interests (6) (99)

24 25 Consolidated financial statements

Consolidated statements of changes in equity (Millions of yen) Consolidated statements of cash flows (Millions of yen)

Equity attributable to owners of the parent Year ended Year ended March 31, 2016 March 31, 2017 Other components of equity

Exchange Cash flows from operating activities differences Subscription Non- Common Capital Retained Treasury on Total Profit before tax ¥8,117 ¥8,466 rights Total Total controlling stock surplus earnings shares translating equity to shares interests foreign Depreciation and amortization 3,521 3,557 operations Impairment loss 905 673

As of April 1, 2015 ¥3,790 ¥3,830 ¥16,435 ¥(0) ¥993 ¥254 ¥1,247 ¥25,302 ¥57 ¥25,359 Interest income (155) (176) Interest expenses 320 275 Profit for the year 5,212 — 5,212 30 5,242 Share of loss (profit) of investments accounted for using the equity method 5 (9) Other comprehensive income (322) (322) (322) (36) (359) Decrease (increase) in trade and other receivables (264) (937) Total comprehensive — ——5,212 (322) — (322) 4,889 (6) 4,883 income for the year Decrease (increase) in inventories (124) 83 Issuance of new shares (exercise of subscription rights) 117117 (73) (73) 161 161 Increase (decrease) in trade and other payables (834) 899 Share-based payment transactions —— 77 77 77 77 Subtotal 11,691 13,206 17 Dividends (432) — (432) (13) (445) Interest income received 12 Interest expenses paid (311) (279) Changes in ownership interests (9) (9) (9) 845 836 in subsidiaries while retaining control Income taxes paid (2,813) (3,200) Total transaction amount 117 117 (432) — (9) 4 (5) (203) 832 629 with owners Net cash provided by (used in) operating activities 8,578 9,743 Transfer to retained earnings 4 (4) (4) — — from other components of equity

As of March 31, 2016 ¥3,907 ¥3,947 ¥21,219 ¥(0) ¥662 ¥254 ¥916 ¥29,989 ¥883 ¥30,872 Cash flows from investing activities Purchase of property, plant and equipment (2,596) (3,492) Purchase of intangible assets (96) (196) Payments for lease and guarantee deposits (279) (377) (Millions of yen) Proceeds from collection of lease and guarantee deposits 115 147

Equity attributable to owners of the parent Payments of construction assistance fund receivables (24) (20) Collection of construction assistance fund receivables 453 455 Other components of equity Purchase of shares of subsidiaries resulting in change in scope consolidation (2,187) (2,787)

Exchange Purchase of investments accounted for using the equity method (986) (1,812) differences Subscription Non- Common Capital Retained Treasury on Total Other, net (595) (686) rights Total Total controlling stock surplus earnings shares translating equity to shares interests (8,769) foreign Net cash provided by (used in) investing activities (6,194) operations

As of April 1, 2016 ¥3,907 ¥3,947 ¥21,219 ¥(0) ¥662 ¥254 ¥916 ¥29,989 ¥883 ¥30,872

Profit for the year 5,631 — 5,631 (46) 5,585 Cash flows from financing activities Net increase (decrease) in short-term loans payable 26 — Other comprehensive income (545) (545) (545) (53) (598) Proceeds from long-term loans payable 428 7,200 Total comprehensive — ——5,631 (545) — (545) 5,086 (99) 4,987 income for the year Repayments of long-term loans payable (7,096) (5,885) Issuance of new shares 6868 (40) (40) 95 95 (exercise of subscription rights) Repayments of lease obligations (240) (246) Share-based payment transactions 7979 79 79 Cash dividends paid (432) (1,039)

Dividends (1,039) — (1,039) (20) (1,059) Other, net (9) 72 102 Changes in ownership interests — — — 33 33 Net cash provided by (used in) financing activities (7,324) in subsidiaries while retaining control Net increase (decrease) in cash and cash equivalents (4,939) 1,077 Total transaction amount 68 60 (1,039) — — 39 39 (872) 20 (853) with owners Cash and cash equivalents at beginning of period 14,992 10,094 Transfer to retained earnings 3 (3) (3) — — from other components of equity Effect of exchange rate change on cash and cash equivalents 41 12 As of March 31, 2017 ¥3,975 ¥4,007 ¥25,813 ¥(0) ¥117 ¥291 ¥408 ¥34,203 ¥804 ¥35,006 Cash and cash equivalents at end of period ¥10,094 ¥11,183

26 27 Company Outline (As of June 29, 2017) Investor Information (As of June 29, 2017)

Stock Information Company Name TORIDOLL Holdings Corporation Stock Listing Tokyo Stock Exchange First Section (Code No. 3397) Share Trading Unit 100 shares Main Business Business management of group subsidiaries mainly consisting restaurant businesses Number of Shares Authorized for Issue 115,200,000 shares Number of shareholders 33,752

Total number of issued shares 43,380,200 shares Sanuki kamaage udon — MARUGAME SEIMEN Yakitori family dining — TORIDOLL Main Brand Handmade soy sauce ramen — MARUSHOYA Yakisoba specialty restaurants — NAGATAHONJYOKEN Major shareholders Beauty and lifestyle brand "SONOKO Co., Ltd." Etc. Ratio of No. of Shares Major Shareholders Ownership Owned (Shares) June 11, 1990: as TORIDOLL Ltd. (%) Establishment October 28, 1995: Became incorporated as Toridoll.corporation October 1, 2016: Converted the corporation to a holdings company (Toridoll Holdings Corporation). Takaya Awata 13,782,000 31.77 T&T inc. 5,580,000 12.86 Capital 3,995,013,000yen (as of March 31,2017) SMBC Trust Bank Ltd. Designated Securities Trust 1,868,000 4.31 Japan Master Trust Bank, Ltd. (Trust account) 1,240,700 2.86 11F, Nihon-Seimei Sannomiya-eki-mae Bldg., Japan Trustee Services Bank, Ltd. (Trust account) 1,157,800 2.67 Main Office 7-1-1 Onoedori, Chuo-ku, Kobe 651-0088, JAPAN TEL: +81-78-200-3430 FAX: +81-78-200-3431 STATE STREET LONDON CARE OF STATE STREET BANK AND TRUST, 700,000 1.61 BOSTON SSBTC A/C UK LONDON BRANCH CLIENTS-UNITED KINGDOM

22F, Gate City Ohsaki West Tower, 1-11-1 Ohsaki, Shinagawa-ku, Tokyo 141-0032, Japan Japan Trustee Services Bank, Ltd. (Trust account 5) 445,500 1.03 Tokyo Headquarters TEL: +81-3-5436-7600 FAX: +81-3-3494-7067 CHASE MANHATTAN BANK GTS CLIENTS ACCOUNT ESCROW 438,584 1.01 STATE STREET BANK CLIENT OMNIBUS OM04 429,300 0.99 Tokyo Headquarters 5F, Shin-Ohsaki Kangyo Building, 1-6-4 Ohsaki, Shinagawa-ku, Tokyo 141-0032, Japan ANNEX STATE STREET BANK AND TR UST CLIENT OMNIBUS ACCOU NT OM02 505002 428,000 0.99 Note: The shareholding ratio has been calculated by deducting the treasury shares. President Takaya Awata Executive Director Takashi Nagasawa Executive Director Kimihiro Tanaka Shareholder composition Director Hiroyuki Kobayashi Executive Officers Director (Audit and Supervisory Committee Member) Toshiyasu Umeki Other corporations Financial institutions Director (Audit and Supervisory Committee Member) Hiroaki Umeda Individuals and 0.37% 0.12% Foreign others Director (Audit and Supervisory Committee Member) Maki Kataoka corporations, etc. Foreign Financial instruments 52.92% *As of June 29, 2017 15.43% corporations, etc. Number of business operators Number of 0.53% 0.15% shareholders shares Mizuho Bank, Ltd. 33,752 Other corporations 43,380,200 The Bank of Tokyo Mitsubishi UFJ, Ltd. 13.75% Corresponding Banks Sumitomo Mitsui Banking Corporation and others Individuals Financial institutions and others 15.32% Financial instruments 98.82% business operators Treasury shares 0.00% Treasury shares 0.00% 2.57% Number of Regular Staff 1,077(current as of March 31, 2017) Number of Employees Number of Part-Time Staff 11,425(current as of March 31, 2017) (Yen) * Calculated from the average number of people per month each working eight hours a day. Stock price range / Monthly trading volume 3,500

3,000 Toridoll Japan.corporation（Japan） 2,500 SONOKO Co., Ltd.（Japan） TORIDOLL USA CORPORATION (USA) 2,000 TORIDOLL HOLDING LIMITED (Hong Kong) Primary Affiliated (Shares) 1,500 TORIDOLL TAIWAN CORPORATION (Taiwan) Company 20,000,000 GEORGE'S CORPORATION (USA) 15,000,000 1,000 TORIDOLL KOREA CORPORATION (Republic of Korea) 10,000,000 500 TORIDOLL DINING CORPORATION (USA) 5,000,000 WOK TO WALK FRANCHISE B.V. (Netherlands) 0 0 2012 2013 2014 2015 2016 2017 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 123456789101112123456789101112123456789101112123

28 29 TORIDOLL Holdings Corporation

Tokyo Headquarters 22F, Gate City Ohsaki West Tower,1-11-1, Ohsaki,Shinagawa-ku,Tokyo 141 ‐ 0032, Japan

Main Office 11F, Nihon-Seimei Sannomiya-eki-mae Bldg., 7-1-1, Onoedori, Chuo-ku, Kobe 651-0088 JAPAN