ANNUAL REPORT 2018
TORIDOLL Holdings Corporation CONTENTS
02 CORPORATE PHILOSOPHY
03 MESSAGE FROM PRESIDENT
04 FINANCIAL HIGHLIGHTS
06 GLOBAL PRESENCE
07 AFFILIATED COMPANY
08 CORPORATE STRATEGY
10 FLAGSHIP BRAND
12 OUR BRANDS IN JAPAN
14 OUR BRANDS WORLDWIDE
16 LIFESTYLE BUSINESS
17 M&A
18 HISTORY
19 SOCIAL INITIATIVES
20 CORPORATE GOVERNANCE
22 MANAGEMENT DISCUSSION & ANALYSIS
24 CONSOLIDATED FINANCIAL STATEMENTS
28 COMPANY OVERVIEW
29 INVESTOR INFORMATION
01 CORPORATE PHILOSOPHY
From the moment we meet our customers, we strive to fulfill our customers’ satisfaction and create memorable moments that make our customers happy. In doing so, we continually challenge ourselves to reach the next level and onward to the future.
02 MESSAGE FROM PRESIDENT
“Delicious” has no borders
The passion for food is what made me start my business. An appetizing aroma that stirs the appetite, the master chef’s amazing culinary skills, the heat from the kitchen as food is being prepared in front of you… all of these elements come together to create a “deliciousness” that is experienced (enjoyed/appreciated) with all the five senses instead of just with your tongue… It is our desire to bring this passion for food to as many customers as possible, and our mission is to spread it to the entire world. With each bite we want you to smile and think, “This is delicious!” We don’t speak the same language, but our customers’ smiles tell us their emotions. We, at TORIDOLL, are proud to be a company that continues to cherish these values. With our commitment to world-class hospitality, we will develop business models that respect the cultural and regional differences of each country. With our origins in Japan, we aim to become a leading global company in the restaurant industry. I believe we can open up a future of unlimited opportunities in the global market.
Takaya Awata President & Founder TORIDOLL Holdings Corporation
03 FINANCIAL HIGHLIGHTS Years Ended March 31, 2018.
TOTAL TRADING TRANSACTIONS
Other Brands 10.4 (10.3%)
Overseas Brands (Billions of yen) 10.4 (10.2%)
Total trading transactions TONICHI 116.5 3.2 (3.2%) 116.5 billion YEN billion YEN
TORIDOLL 2.0 (2.0%)
MARUGAME SEIMEN 90.4 (88.8%)
NUMBER OF STORES
(Stores) Number of restaurants outside Japan 1,600 Number of restaurants in Japan
1,400 Number of stores 1,200 1,540 1,000 STORES 800
600
400
200
0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
*Figures for fiscal 2014 and fiscal 2015 represents net income attributable to owners of the parent company, while International Financial Reporting Standards has been introduced from fiscal 2015.
04 FINANCIAL HIGHLIGHTS Years Ended March 31, 2018.
2014 2015 2016 2017 2018
IFRS IFRS IFRS IFRS IFRS
For the year (Millions of yen) Total trading transactions 78,318 87,294 95,587 101,779 116,504
Cost of sales (18,907) (22,309) (24,105) (26,216) (30,860)
Gross profit 59,411 64,986 71,482 75,563 85,644
Selling, general and administrative expenses (54,342) (58,605) (62,347) (66,280) (77,685)
Operating profit 2,643 4,175 8,733 8,619 7,635
Profit for the year 978 2,011 5,242 5,585 4,663
At year end (Millions of yen) Total assets 52,885 59,019 57,793 64,011 110,212
Total equity 18,094 25,359 30,872 35,006 37,246
Per share data (Yen) EPS 24.81 48.84 120.56 129.89 107.44
BPS 459.94 586.10 692.48 788.44 834.13
Cash dividends 8.00 10.00 24.00 26.00 26.50
Major indicators (%) Equity ratio 34.2% 42.9% 51.9% 53.4% 32.9%
ROE 5.5 9.1 18.9 17.5 13.2
PER 39.5 34.1 18.8 18.6 36.0
Payout ratio 32.3 20.5 19.9 20.0 24.7
*The Company Group has applied International Financial Reporting Standards (IFRS) starting from the consolidated year ended March 31, 2015. *Figure for the previous year is also disclosed adhering to IFRS.
05 GLOBAL PRESENCE
Our multi-portfolio strategy to reflect diverse regional food cultures. Opened 1,575 restaurants globally
*As of July 30, 2018.
28 22 STORES STORES Japan
26 China 16 STORES 75 1,045 STORES STORES STORES 36 STORES Other Asia countries 59 33 STORES STORES Hong Kong Malaysia 118 70 STORES STORES 47 STORES
NUMBER OF STORES IN MAJOR COUNTRIES AND REGIONS
Japan 1,045
Hong Kong 118
China 75
Malaysia 70
Indonesia 47
Taiwan 33
Other Asia countries 59
Portugal 36
UK 22
Other European countries 26
USA 16
Other countries 28
0 20 40 60 80 100 120 (Stores)
06 AFFILIATED COMPANY
TORIDOLL HOLDING LIMITED TORIDOLL BEIJING CORPORATION Fast Beauty TORIDOLL USA CORPORATION MAJU LINTAS SDN BHD MARU P LLC Crackin' Kitchen USA LLC TORIDOLL HANGZHOU CORPORATION MARU A LLC Balloon, Inc. TORIDOLL SUZHOU CORPORATION NOM NOM ENTERPRISE LLC TORIDOLL ITALIA S.R.L. TORIDOLL WUHAN CORPORATION Wok To Walk International SL TORIDOLL SINGAPORE PTE. LTD. TORIDOLL CHONGQING CORPORATION Wok to Walk Franchise B.V. TORIDOLL TAIWAN CORPORATION TORIDOLL CHENGDU CORPORATION Wok To Walk US Holdings. Inc. TORIDOLL KOREA CORPORATION TORIDOLL SHENZHEN CORPORATION WOK TO WALK US MANAGEMENT. INC. GEORGE'S CORPORATION TORIDOLL GUANGZHOU CORPORATION WOK TO WALK US FRANCHISE SYSTEMS LLC SONOKO Co., Ltd. Marugame noodle (iSQUARE) Co., Ltd. JAPANESE COFFEE LOVERS PTE. LTD. Chulala Co., Ltd. Marugame (Le Fu) Co.,Ltd. P.T. Selera Prima Lestarindo Serendip Inc. Marugame (Kang Yi) Co.,Ltd. UTARA 5 FOOD AND BEVERAGE SDN BHD ASIA BEAUTY & COSMETICS GROUP LIMITED Marugame (HK) Limited MARUGAME UDON USA LLC
荘能子化粧品貿易(上海)有限公司 Marugame (Big Ben) Co.,Ltd. WTW PACIFIC HOLDINGS LLC TORIDOLL DINING CORPORATION Marugame (Kang Shan) Co.,Ltd. BOAT NOODLE SDN BHD TORIDOLL DINING CALIFORNIA, LLC Marugame (Kowloon East) Co.,Ltd. PINKIPEDIA SDN BHD Tokyo Table Holdings, LLC Marugame face (Xi Shen) Co.,Ltd. SIAM STREET CUISINE SDN BHD TON-ICHI USA, LLC Marugame (Luk Yeung Galleria) Co.,Ltd. NIT NOI NOODLE SDN BHD Jointed-Heart Catering Holdings Limited Toridoll and Heyi Trading (Singapore) Pte. Ltd. SANKEE RESOURCES SDN BHD Jointed-Herat Limited Toridoll and Heyi (Singapore) Pte. Ltd. MAJU LINTAS SDN BHD
New Huge Corporation Limited 上海多泰餐饮管理有限公司 7 NOKITA SDN BHD
active source Inc. 上海稻瑞多餐饮管理有限公司 SAKAGURA UK LTD TORIDOLL AND HEYI GROUP COMPANY LIMITED Marugame (HR) Limited SHORYU HOLDINGS LTD Toridoll and Heyi Holding Limited NODU FOODS Co., Ltd. YKKO TORIDOLL MYANMAR Co., Ltd. TORIDOLL SHANGHAI CORPORATION TORIDOLL CAMBODIA COMPANY LIMITED
07 CORPORATE STRATEGY
MID TO LONG-TERM VISION
NEXT LIFESTYLE INCUBATOR Started out as a restaurant company evolving into a global lifestyle company
Restaurant Health care NEXT LIFESTYLE INCUBATOR
HomemadeHomemade meals,meals, BeautyBeauty take-awaytake-away CosmeticsCosmetics
MID-TERM GOAL
We aim for consolidated net sales of 4.5 billion $, with 6,000 restaurants worldwide
*The exchange rate as of August 10, 2018. Sales 4.5 billion $ (500 billion YEN)
Overseas business New domestic business 2.6 billion $ Existing domestic business 4,000 restaurants
0.7 billion $ 700 restaurants
1.2 billion $ 1,300 restaurants
Present 2025
08 CORPORATE STRATEGY
BUSINESS STRATEGY
Establish a cycle of creating new businesses and expanding the business base to exploit our existing business base
Domestic Overseas restaurants restaurants Health care Beauty
TONICHI
BANPAIYA
The business base of
Further growth of Creation of our business base a new business base
Existing main business
THE BUSINESS BASE
With our concept of “freshly hand-made”, we achieved rapid growth. As a result, we developed unique strengths NEW BUSINESS
RESTAURANT
Operation Product Development Restaurant Development Corporate Culture Procurement Forming a trinity with the producer Turning inefficient into efficient 100 restaurants annually Overwhelming volume and the manufacturer Passion and speed
09 FLAGSHIP BRAND
MARUGAME SEIMEN TORIDOLL Group’s flagship brand, MARUGAME SEIMEN, is a self-service restaurant chain specializing in Sanuki udon. Since its first restaurant opened in Japan in November 2000, MARUGAME SEIMEN has been committed to serving the tasty, genuine “freshly handmade” udon. With a noodle machine installed at each restaurant, we make the best dough each day from carefully selected domestic wheat, salt and water. Fresh noodles are cooked right away for “freshly kneaded and boiled taste”. By cooking in front of our customers in an open kitchen, we aim to create an authentic restaurant with the ambience of a noodle-making factory in Kagawa prefecture, home of Sanuki udon. Today, MARUGAME SEIMEN has become a popular brand that is supported by many customers young and old, totaling more than 150 million people a year. Since our establishment, we have steadily expanded our restaurant network, reaching about 800 restaurants in all prefectures, and we are actively expanding not only in Japan but also around the world. With a reach unsurpassed by other companies, we have the absolute No.1 position in the udon industry, both in sales and number of restaurants.
10 FLAGSHIP BRAND
What is “Sanuki Udon”?
Udon is a type of thick wheat flour noodle, used frequently in Japanese cuisine. In the past, Udon was a special food that people eat at ceremonies and celebrations. It has become a popular staple food in Japan as an alternative to rice. There are numerous varieties of Udon today, and Sanuki Udon is recognized as one of the three most famous types of Udon. Named after the old name of Kagawa prefecture in the south-west of Japan, Sanuki Udon is known for its firm, al-dente texture. The thick long flour noodle is perfectly nice and chewy, yet so soft and silky to slurp. Udon remains extremely popular in Kagawa Prefecture, which is number one in the production and consumption of Udon.
11 OUR BRANDS IN JAPAN
TORIDOLL This is an authentic “Yakitori (grilled chicken)” restaurant where all family members can enjoy together regardless of age. The business name “TORIDOLL” comes from “tori” of “Yakitori”. TORIDOLL was the first business of TORIDOLL Holdings.
TONICHI A restaurant chain specializing in katsu-don (pork cutlets over rice) and ton- teki (pork steak) known for the ultimate in savory and tender pork. This restaurant chain is known for its katsu-don featuring freshly deep fried pork cutlet enveloped with egg and special warishita stock and its tonteki teishoku (set meal) featuring pork steak barbequed with special sauce.
MARUSHOYA A chain of ramen shops committed to the in-house production of not just the noodles but other ingredients as well. Their extremely flavorful bowls of ramen are possible only because they are elaborately prepared all by hand.
NAGATA-HONJYO-KEN A chain of yakisoba restaurants, featuring medium-thick noodles made in-house and rich flavorings typical of Kobe’s old town area.
12 OUR BRANDS IN JAPAN
MAKINO This chain of restaurants specialized in a set tempura menu only frying the ingredients after the order is place by the customers, always serving crisp, piping hot tempura.
Kona’s Coffee / Lanai Cafe A Hawaiian-style cafe designed with a classic Hawaiian vacation mood. The soft, fluffy pancakes are made by hand in store and cooked fresh to order, while each cup of Hawaii Kona Blend Coffee is brewed to perfection with an aroma that instantly set you in Hawaiian vacation mode.
ZUNDO-YA Since opening the first shop in Himeji city in April 2002, we have stores mainly in the Kansai region with our focus in TONKOTSU (rich pork based soup) ramen. Our customers can choose from two kinds of fine noodles that are carefully hand-made. Our TONKOTSU soup is made only from water and pork bones in a process of over 20 hours, giving it its unique taste.
BANPAIYA Since opening our first store in 2009, we have established our business mainly in Tokyo. We have characterized the concept to fit the current needs of the people, whereby rapid-growing single and senior households can enjoy us casually. Most of our stores are standing bars with satisfying dishes starting from 100 yen and drinks for 500 yen or less.
13 OUR BRANDS WORLDWIDE
MARUGAME UDON A specialized Sanuki Udon restaurant serves an authentic tasty Udon in self-service style. In an open kitchen style, all the preparation procedures are visible and customers can make sure that all food is freshly made in the restaurant.
14 OUR BRANDS WORLDWIDE
Boat Noodle Tracing its roots back to small soup noodle dishes of the floating markets of Thailand, this popular fast food chain offers the perfect blend of convenience, flavor and visual entertainment. Pork-free dishes have also received Malaysian Halal certification, making them ideal for customers of Islamic faith to enjoy.
SHORYU SHORYU triggered a ramen boom in London with the authentic tonkotsu pork broth style ramen it serves. Other dishes like yakitori, pan-fried gyoza dumplings and Hakata buns with ingredients wrapped in a Chinese-style dough help to complement this quick and convenient, authentic style of Japanese dining.
WOK TO WALK Asian fast food chain that spreads worldwide, mainly in Europe, featuring a modern feel by adding Western trends to the Thai street food concept. With dishes cooked right in front of customers on raging flames, this style of cooking that fuses entertainment value with rich flavor is popular everywhere.
Tamjai Yunnan Mixian / Tamjai Samgor Mixian Tamjai’s Yunnan Noodle is a rice noodle very popular for its texture and spicy soup, added with wide variety of toppings and level of spiciness. It attracts especially the young generations with its value for price.
15 LIFESTYLE BUSINESS
A lifestyle brand that provides beauty and health through food SONOKO “SONOKO” is a lifestyle company that provides beauty and health through oil-free, additive-free food and domestically produced beauty products that do not damage your skin, with the desire to “provide joy to our customers through safe and ethical health and beauty products”. In response to the needs for beauty, health and food safety, which are increasingly becoming important worldwide, we will develop group synergy with our know-how and expansive reach cultivated over many years to create new lifestyle concepts as well as added values.
Energize your day with beautiful hair fufu “fufu” provides quality professional services at a reasonable price by specializing in hair coloring services and streamlining the business. Generally, coloring hair requires significant amount of money and time at a hair salon or even more effort to do it at home, but “fufu” has established new options in the hair color market.
16 M&A
9 M&A deals in 3 years
Tamjai Yunnan Mixian Cross-Border Boat Noodle SHORYU BANPAIYA Tamjai Samgor Mixian (Maraysia) (UK) (Japan) (Hong kong) Domestic
May Feb. May Dec. Jan. Jul. Nov. Dec. 2015 2016 2016 2016 2017 2017 2017 2017
WOK TO WALK SONOKO fufu ZUNDO-YA (The Netherlands) (Japan) (Japan) (Japan)
CORPORATE VENTURE CAPITAL
Established an investment subsidiary, TD Investment Co., Ltd.
In 2015, we established TD Investment Co., Ltd, a wholly-owned subsidiary that makes business investments. Our subsidiary aims to create a rich restaurant culture by bringing new ideas in the restaurant market where fragmentation continues. As a group, we aim to create new businesses that we alone cannot realize by connecting ideas and people.
FUND INVESTMENT
Investment in US Food Fund
We have taken a stake in an investment fund, Hargett Hunter Premiere Brands Fund I, LP (headquartered in North Carolina, USA, hereinafter referred to as HHPBF) formed by a US investment company, Hargett Hunter Capital Partners (headquartered in North Carolina, USA, hereinafter referred to as HHCP). HHCP aims to raise US$100 million in total to invest in the US restaurant market, which is the world’s largest restaurant market with a size of around 80 trillion JPY as of 2016. HHCP will explore and invest in restaurant chains and franchise companies where high growth is expected, as well as offer a variety of platforms ranging from investment branding and location development to operation improvement.
17 HISTORY
Operating more than 1,500 restaurants around the world
Aug. 1985 Established the first yakitori shop “TORIDOLL SANBAN-KAN”
Nov. 2000 Opened its first MARUGAME SEIMEN restaurant
Feb. 2006 Listed shares on the Tokyo Stock Exchange (TSE) Mothers Index
Dec. 2008 Changed listing to the First Section of the TSE
2011 Opened its first restaurants outside of Japan, in Hawaii Opened MARUGAME SEIMEN restaurants in Thailand, China and South Korea Opened MARUGAME SEIMEN restaurants in every prefecture in Japan, reaching 500 restaurants
2013 Opened MARUGAME SEIMEN restaurants in Hong Kong, Russia, Indonesia, Taiwan and Australia
2014 Opened MARUGAME SEIMEN restaurant in Vietnam
2015 Opened MARUGAME SEIMEN restaurant in Malaysia
Jun. 2015 Achieved 1,000 restaurants in 30 countries and regions around the world on the Company’s 30th anniversary 1 Aug. 2017 Opened MARUGAME SEIMEN restaurant in the Philippines billion $ (116 billion JPY)
Mar. 2018 MARUGAME SEIMEN has opened 1,000 restaurants worldwide
(Billions of $)
1 528
0.8
0.6 Total trading transactions 334
Number of restaurants outside Japan 243 Number of restaurants in Japan 0.4 102 1012 61 0.2 877 22 847 848 849 762 4 629 519
403
285
190 132 87 39 56 Our beginning 15 22 26
1985 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
*Figures for fiscal 2014 and fiscal 2015 represents net income attributable to owners of the parent company, while International Financial Reporting Standards has been introduced from fiscal 2015. *The exchange rate as of Aug. 30, 2018.
Established in 1985. 2003- 2007- Expanded the business around Achieved the diverse food court strategy Expanded the MARUGAME SEIMEN “Yakitori Family Dining TORIDOLL”. with a focus on MARUGAME SEIMEN. brand with roadside restaurants. Started to expand into overseas.
18 SOCIAL INITIATIVES
We want to improve our society through food-related activities
Donating 1 yen from each bowl of Kama-age (straight-from-the-pot) Udon MARUGAME SEIMEN is committed to various CSR activities. For example, we donate a portion of domestic sales of our top menu item “Kama-age Udon” to cover the cost of school lunches for children in developing countries. In 2016, we constructed a school in Myanmar as a part of these initiatives.
MARUGAME udon class The MARUGAME udon class is a handmade udon class where you can experience “freshly handmade” taste. It’s also held at kindergartens, elementary schools, and even MARUGAME SEIMEN restaurants. This class has been held more than 800 times since its inception, joined by more than 10,000 children. Filled with the smiles of the children and the seriousness of their eyes, this udon class has become an irreplaceable activity for us as well.
19 CORPORATE GOVERNANCE
CORPORATE GOVERNANCE STRUCTURE
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 as well as the corporate governance structure.
OVERVIEW OF EACH ORGANIZATION
Board of Directors Internal Audit Office The Company’s Board of Directors meets monthly in The Company has established the Internal Audit Office, principle and at other times when necessary to decide which reports directly to the president. This office carries on important business matters and to supervise the out reviews and assessments, from an independent performance of duties by the directors in accordance position, on the appropriateness and effectiveness of with the law, Articles of Association, Board of Directors the Company Group’s internal controls in accordance with Regulations and other company rules. the Company’s management policy. Through proposals for improvement based on these results, the Company strives Audit and Supervisory Committee to continuously improve the soundness and efficiency of The Company’s Audit and Supervisory Committee audits its corporate management. The Internal Audit Office independently the duties of the directors. The Audit and conducts internal audits of subsidiaries when necessary in Supervisory Committee meets regularly with the president accordance with the Internal Audit Regulations and to exchange opinions. When necessary, the committee reports the results of these audits to the president. communicates and shares information with other directors, corporate auditors of subsidiaries (or people who hold a similar position), the general manager of the Internal Audit Office and the accounting auditor, to ensure the effectiveness of its audits. This committee meets monthly in principle and at other times when necessary to discuss material matters in accordance with the laws, Articles of Association, Audit and Supervisory Committee Regulations and other company rules.
20 CORPORATE GOVERNANCE
Risk Management Structure The Company has established Risk Management reasons are detected, to ascertain the facts. The chair Regulations and the Risk Management Committee, then issues instructions on countermeasures and asks chaired by the president, to comprehensively identify the applicable business division(s) to report on the details and evaluate risks concerning the execution of business of the risks and the extent of the loss that might result. and to respond to these risks appropriately. The Internal Audit Office periodically audits the head office The chair of the Risk Management Committee convenes divisions and restaurants to ensure that risks are quickly the committee whenever risks associated with financial identified and reported to the president, who is responsible loss due to changes in the management environment, for all business operations. violations of the law or Articles of Association or other
General shareholders’ meeting
Appointment/ Appointment/ Appointment/ Dismissal Dismissal Dismissal
Cooperation/ Collaboration Audit Executive directors Audit and Supervisory Committee Accounting auditor (Three directors, of whom three are (Four directors) outside directors) (audit firm)
Directors (Seven directors)
Selection/ Selection/ Cooperation/ Cooperation/ Retirement Retirement Collaboration Collaboration
Instructions
President Report Internal Audit Office
Operating audits/ Report Internal audit Accounting audits
Instructions/ Accounting Control audits
Executive Officer Business divisions
21 MANAGEMENT DISCUSSION & ANALYSIS
BUSINESS PERFORMANCE
During the consolidated fiscal year under review, Japan’s the fiscal year under review, consolidated total trading economy experienced a gradual recovery as government transactions continued to see robust growth, increasing stimulus and monetary easing by the Bank of Japan 14.5% year on year to ¥116,504 million. Operating profit helped to improve corporate earnings and the employment dropped 11.4% to ¥7,635 million and profit before tax situation, which led to increase in individual consumption. declined 15.2% to ¥7,175 million. Profit for the year The food service industry saw a second consecutive year of attributable to owners of the parent company totaled increased overall annual sales. Primary segments such as ¥4,665 million, down 17.2% year on year. Fast Casual and Casual Dining, saw increase in the Additionally, EBITDA declined 3.5% year on year to ¥11,745 average customer spend due to increase in sales of million, while adjusted EBITDA declined 4.4% year on year products with relatively high value, such as special and to ¥12,362 million (*2). limited-time offer items. As a result, sales have increased for nineteen consecutive months. (*1) Restaurants other than those directly owned and operated by the Company or its Given this environment, the Group pursued a management subsidiaries are referred to as franchise restaurants. policy that emphasizes earnings. In Japan, the Company (*2) The Group now discloses EBITDA and adjusted EBITDA starting with the current worked to boost earnings by improving customer satisfac- fiscal year under review as useful comparative information for the Group’s tion and raising visibility through proactive product performance. EBITDA excludes the effects of non-cash expenditure items (depreciation and promotions and a nationwide TV ad campaign, among amortization, etc.) from operating profit. other initiatives. The Company continued to actively In addition, adjusted EBITDA excludes the effects of impairment losses and pursue M&As and new restaurant openings both nationally extraordinary expenses (advisory fees concerning stock acquisitions, etc.) from EBITDA. and internationally. EBITDA and adjusted EBITDA are calculated as follows. Outside Japan, the Company continued with M&As and ・EBITDA = Operating profit + Other operating expenses – Other operating income + Depreciation and amortization new restaurant openings, but also closed unprofitable ・Adjusted EBITDA = EBITDA + Impairment losses + Extraordinary expenses ones, with an eye on markets in countries where the Company does business, which helped to improve the profitability of overseas businesses. MARUGAME SEIMEN (self-serve udon restaurants) During the fiscal year under review, the Company opened Under the MARUGAME SEIMEN brand, we opened eighteen new MARUGAME SEIMEN restaurants and 126 eighteen new restaurants, including eleven roadside other outlets after working to expand into new business restaurants and seven restaurants inside shopping malls. areas, with new business models such as BUTAYA Four restaurants were closed, bringing the total number of TONICHI. restaurants in operation at the end of the fiscal year under Outside of Japan, the Company continued an aggressive review to 792. expansion, while also emphasizing profitability, by opening As a result, MARUGAME SEIMEN revenue increased 5.6% 121 new directly owned outlets. For franchises and other year on year to ¥90,379 million, and segment profit rose restaurants (*1), the Company expanded operations by 2.3% to ¥13,992 million. opening 111 outlets. As a result, the number of restaurants operated by the TORIDOLL (yakitori family restaurants) Group at the end of the consolidated fiscal year under The TORIDOLL brand has the same number of stores as review increased by 329 year on year (of which 88 were last year, with a total of 17 restaurants in operation at the franchise restaurants) to 1,540 restaurants (of which 379 end of the fiscal year under review. were franchise restaurants). Consequently, revenue fell 5.1% year on year to ¥2,040 Regarding the Company’s business performance during million, and segment profit dropped 57.1% to ¥76 million.
22 MANAGEMENT DISCUSSION & ANALYSIS
BUTAYA TONICHI including 365 franchise restaurants. (a restaurant chain specializing in katsu-don (pork As a result, Overseas revenue increased 78.9% year on cutlets over rice) and tonteki (pork steak)) year to ¥10,425 million, and segment profit rose 117.9% Under the BUTAYA TONICHI brand, we opened twenty four to ¥792 million. new restaurants, including two roadside restaurants and twenty two restaurants inside shopping malls, bringing Other the total number of restaurants in operation at the end of For Other restaurants, 102 new restaurants were opened, the fiscal year under review to 46. including 12 franchise restaurants, while 5 restaurants As a result, BUTAYA TONICHI revenue increased 151.0% were closed. This resulted in a consolidated total of 157 year on year to ¥3,220 million, but a segment loss of ¥209 restaurants in operation at the end of the fiscal year million was realized compared with a segment loss of under review, including 14 franchise restaurants. ¥145 million in the previous year. Other segment include: MARUSHOYA, NAGATA-HONJYO- KEN, Kona’s Cofee, SONOKO, ZUNDO-YA, BANPAIYA and Overseas others. Outside of Japan, 232 new restaurants were opened, As a result, Other revenue increased 50.8% year on year including 111 franchise restaurants, while 38 restaurants to ¥10,441 million, but a segment loss of ¥882 million was were closed, including 35 franchise restaurants. This realized compared with a segment profit of ¥66 million in brought the consolidated number of restaurants in the previous year. operation at the end of the fiscal year under review to 528,
ANALYSIS OF FINANCIAL CONDITION
Assets Liabilities / Equity Total consolidated assets at the end of the fiscal year Total liabilities increased ¥43,961 million, compared with under review increased ¥4,621 million, compared with the the end of the previous fiscal year, to ¥72,966 million. This end of the previous fiscal year, to ¥110,212 million. The change was mainly due to increases in trade and other main reason for this change was increases in cash and payables and long-term loans payable of ¥34,555 million cash equivalents, trade and other receivables, and and ¥3,689 million, respectively, compared with the end of intangible assets and goodwill of ¥3,615 million, ¥5,398 the previous fiscal year. million, and ¥32,314 million, respectively. Total equity increased ¥2,240 million, compared with the end of the previous fiscal year, to ¥37,246 million, due to an increase in retained earnings and other factors.
CASH FLOWS
The consolidated balance of cash and cash equivalents million, expenditures for the purchase of shares of (hereafter, “cash”) at the end of the fiscal year under subsidiaries resulting in a change in the scope of consoli- review increased ¥3,615 million, compared with the end of dation of ¥32,418 million. the previous fiscal year, to ¥14,798 million, a year-on-year increase of 32.3%. Cash Flow from Financing Activities Cash gained from financing activities totaled ¥35,039 Cash Flow from Operating Activities million, compared with an outflow of ¥102 million in the Cash obtained from operating activities totaled ¥9,862 previous year. This was mainly attributable to net increase million, up 1.2% from the previous fiscal year. This was in short-term loans payable by ¥34,579 million, proceeds mainly attributable to profit before tax of ¥7,175 million and from long-term loans payable of ¥8,745 million as well as depreciation and amortization of ¥3,984 million, increase in expenditures for the repayments of long-term loans trade and other receivables of ¥1,276 million, while income payable of ¥7,007 million, and cash dividends paid of ¥1,128 taxes paid totaled ¥2,439 million. million.
Cash Flow from Investing Activities Cash used in investing activities increased to ¥39,860 million, compared with ¥8,769 million in the previous year. This was mainly attributable to expenditures for the purchase of property, plant and equipment of ¥5,498
23 CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statements of financial position (Millions of yen)
As of March 31, 2017 As of March 31, 2018
Assets Current assets Cash and cash equivalents 11,183 14,798 Trade and other receivables 3,697 5,766 Inventories 585 815 Other current assets 1,242 1,423 Total current assets 16,706 22,802 Non-current assets Property, plant and equipment 23,972 29,370 Intangible assets and goodwill 6,100 38,414 Investments accounted for using the equity method 4,061 4,084 Other financial assets 10,307 12,597 Deferred tax assets 1,629 1,829 Other non-current assets 1,236 1,116 Total non-current assets 47,305 87,410 Total assets 64,011 110,212
Liabilities Current liabilities Trade and other payable 6,867 9,997 Short-term loans payable 24 34,580 Current portion of long-term loans payable 5,167 5,198 Lease obligations 244 325 Income taxes payable 1,340 1,886 Provisions 424 505 Other current liabilities 2,397 3,906 Total current liabilities 16,464 56,396 Non-current liabilities Long-term loans payable 6,588 10,246 Lease obligations 3,684 3,457 Provisions 1,188 1,728 Deferred tax liabilities 963 956 Other non-current liabilities 119 182 Total non-current liabilities 12,541 16,570 Total liabilities 29,005 72,966
Equity Equity attributable to owners of the parent Capital stock 3,975 4,031 Capital surplus 4,007 4,064 Retained earnings 25,813 29,347 Treasury shares (0) (0) Other components of equity 408 (1,200) Total equity attributable to owners of the parent 34,203 36,242 Non-controlling interests 804 1,004 Total equity 35,006 37,246 Total liabilities and equity 64,011 110,212
24 CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statements of income (Millions of yen)
Year ended Year ended March 31, 2017 March 31, 2018
Total trading transactions 101,779 116,504 Cost of sales (26,216) (30,860) Gross profit 75,563 85,644 Selling, general and administrative expenses (66,280) (77,685) Impairment loss (673) (198) Other operating income 523 335 Other operating expenses (514) (462) Operating profit 8,619 7,635 Finance income 177 182 Finance costs (339) (458) Finance income (costs), net (162) (276) Share of profit (loss) of investments accounted for using the equity method 9 (184) Profit before tax 8,466 7,175 Income tax expense (2,881) (2,513) Profit for the year 5,585 4,663
Profit for the year attributable to Owners of the parent 5,631 4,665 Non-controlling interests (46) (2) Profit for the year 5,585 4,663
Earnings per share attributable to owners of the parent (yen) Basic earnings per share 129.89 107.44 Diluted earnings per share 129.29 106.66
Consolidated statements of comprehensive income (Millions of yen)
Year ended Year ended March 31, 2017 March 31, 2018
Profit for the year 5,585 4,663 Other comprehensive income Items that may be reclassified to profit or loss Exchange differences on translating foreign operations (250) (1,721) Share of other comprehensive income of investments accounted for (348) 148 using the equity method Other comprehensive income (598) (1,574) Comprehensive income for the year 4,987 3,089 Comprehensive income for the year attributable to Owners of the parent 5,086 3,019 Non-controlling interests (99) 70
25 CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statements of changes in equity (Millions of yen)
Equity attributable to owners of the parent
Other components of equity
Exchange differences Subscription Non- Common Capital Retained Treasury on Total rights Total Total controlling stock surplus earnings shares translating equity to shares interests foreign 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
Other comprehensive income (545) (545) (545) (53) (598)
Total comprehensive income for the year —— 5,631 — (545) — (545) 5,086 (99) 4,987 Issuance of new shares (exercise of subscription rights) 68 68 (40) (40) 95 95
Share-based payment transactions 79 79 79 79
Dividends (1,039) — (1,039) (20) (1,059)
Change of scope of consolidation — — 33 33 Changes in ownership interests in subsidiaries while retaining control (7) — (7) 7 — Total transaction amount with owners 68 60 (1,039) — — 39 39 (872) 20 (853) Transfer to retained earnings from other components of equity 3 (3) (3) — —
As of March 31, 2017 3,975 4,007 25,813 (0) 117 291 408 34,203 804 35,006
(Millions of yen)
Equity attributable to owners of the parent
Other components of equity
Exchange differences Subscription Non- Common Capital Retained Treasury on Total rights Total Total controlling stock surplus earnings shares translating equity to shares interests foreign operations
As of April 1, 2017 3,975 4,007 25,813 (0) 117 291 408 34,203 804 35,006
Profit for the year 4,665 — 4,665 (2) 4,663
Other comprehensive income (1,646) (1,646) (1,646) 72 (1,574)
Total comprehensive income for the year —— 4,665 — (1,646) — (1,646) 3,019 70 3,089 Issuance of new shares (exercise of subscription rights) 55 55 (34) (34) 76 76
Share-based payment transactions 22 73 73 76 76
Dividends (1,128) — (1,128) (20) (1,148)
Change of scope of consolidation — — 150 150
Others (3) — (3) (3)
Total transaction amount with owners 57 57 (1,131) — — 38 38 (979) 130 (849) Transfer to retained earnings from other components of equity 0 (0) (0) — —
As of March 31, 2018 4,031 4,064 29,347 (0) (1,529) 329 1,200 36,242 1,004 37,246
26 CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statements of cash flows (Millions of yen)
Year ended Year ended March 31, 2017 March 31, 2018
Cash flows from operating activities Profit before tax 8,466 7,175 Depreciation and amortization 3,557 3,984 Impairment loss 673 198 Interest income (176) (181) Interest expenses 275 275 Share of loss (profit) of investments accounted for using the equity method (9) 184 Decrease (increase) in trade and other receivables (937) (1,276) Decrease (increase) in inventories 83 120 Increase (decrease) in trade and other payables 899 985 Increase (decrease) in accrued expenses 35 479 Other, net 341 807 Subtotal 13,206 12,510 Interest income received 17 34 Interest expenses paid (279) (243) Income taxes paid (3,200) (2,439) Net cash provided by (used in) operating activities 9,743 9,862
Cash flows from investing activities Purchase of property, plant and equipment (3,492) (5,498) Purchase of intangible assets (196) (202) Payments of loans receivable (658) (1,739) Collection of loans receivable 320 724 Payments for lease and guarantee deposits (377) (778) Proceeds from collection of lease and guarantee deposits 147 66 Payments of construction assistance fund receivables (20) (283) Collection of construction assistance fund receivables 455 465 Purchase of shares of subsidiaries resulting in change in scope consolidation (2,787) (32,418) Purchase of investments accounted for using the equity method (1,812) (60) Other, net (686) (136) Net cash provided by (used in) investing activities (8,769) (39,860)
Cash flows from financing activities Net increase (decrease) in short-term loans payable — 34,579 Proceeds from long-term loans payable 7,200 8,745 Repayments of long-term loans payable (5,885) (7,007) Repayments of lease obligations (246) (221) Cash dividends paid (1,039) (1,128) Other, net 72 70 Net cash provided by (used in) financing activities 102 35,039 Net increase (decrease) in cash and cash equivalents 1,077 5,041 Cash and cash equivalents at beginning of period 10,094 11,183 Effect of exchange rate change on cash and cash equivalents 12 (1,426) Cash and cash equivalents at end of period 11,183 14,798
27 COMPANY OVERVIEW
COMPANY NAME TORIDOLL Holdings Corporation
MAIN BUSINESS Business management of group subsidiaries mainly consisting restaurant businesses
MAIN BRAND MARUGAME SEIMEN (Sanuki Udon) TORIDOLL (Yakitori family dining) MARUSHOYA (Handmade soy sauce ramen) NAGATA-HONJYO-KEN (Yakisoba specialty shop) SONOKO (Beauty and lifestyle brand)
ESTABLISHMENT June 11, 1990 TORIDOLL Ltd. established October 28, 1995 Became incorporated as Toridoll. Corporation October 1, 2016 Converted the corporation to a holdings company (TORIDOLL Holdings Corporation)
CAPITAL 4,057,346,000 JPY *As of March 31, 2018.
MAIN OFFICE 11F, Nihon-Seimei Sannomiya-eki-mae Bldg., 1-1 Onoedori 7-Chome, Chuo-ku, Kobe 651-0088, JAPAN TEL: +81-78-200-3430 FAX: +81-78-200-3431
TOKYO HEADQUARTER 22F, Gate City Osaki West Tower, 11-1 Osaki 1-Chome, Shinagawa-ku, Tokyo 141-0032, JAPAN TEL: +81-3-5436-7600 FAX: +81-3-3494-7067
BOARD MEMBERS President and Representative Director: Takaya Awata Senior Managing Director: Kimihiro Tanaka Managing Director: Hiroyuki Kobayashi Director: Masatoshi Kamihara Director (Audit and Supervisory Committee Member): Toshiyasu Umeki Director (Audit and Supervisory Committee Member): Hiroaki Umeda Director (Audit and Supervisory Committee Member): Maki Kataoka *As of June 29, 2018.
CORRESPONDING BANKS Sumitomo Mitsui Banking Corporation Mizuho Bank, Ltd. MUFG Bank, Ltd. and others
NUMBER OF EMPLOYEES Number of Full-time Staff: 3,811 Number of Part-Time Staff: 12,690 *Calculated from the average number of people per month each working 8 hours a day. *The number of employees does not include transfer staff sent by this Enterprise Group. *The average annual employment of temporary employees shall be calculated based on the average monthly number of employees which has been converted from 8 hours of work per day. *Temporary staff shall include the part-time staffs but does not include dispatched staff. *Current as of March. 31, 2018.
28 INVESTOR INFORMATION
STOCK INFORMATION
Stock Listing Tokyo Stock Exchange First Section (Code No. 3397) Share Trading Unit 100 shares
Number of Shares Authorized for Issue 115,200,000 shares Number of shareholders 27,906
Total number of issued shares 43,448,845 shares
*As of March 31, 2018.
MAJOR SHAREHOLDERS
Ratio of No. of Shares Major Shareholders Ownership Owned (Shares) (%)
Takaya Awata 13,783,242 31.72 T&T ina a c. 5,580,000 12.84 Japan Trustee Services Bank, Ltd. (Trust account) 1,998,500 4.59 SMBC Trust Bank Ltd. Designated Securities Trust 1,868,000 4.29 Japan Master Trust Bank, Ltd. (Trust account) 1,465,400 3.37 STATE STREET LONDON CARE OF STATE STREET BANK AND TRUST, 800,000 1.84 BOSTON SSBTC A/C UK LONDON BRANCH CLIENTS-UNITED KINGDOM
Japan Trustee Services Bank, Ltd. (Trust account 9) 554,900 1.27 Japan Trustee Services Bank, Ltd. (Trust account 5) 463,600 1.06 STATE STREET BANK AND TRUST CLIENT OMNIBUS ACCOUNT OM02 505002 442,400 1.01 STANDARD LIFE ASSURANCE LIMITED- PENSION FUNDS 428,100 0.98
*The shareholding ratio has been calculated by deducting the treasury shares.
SHAREHOLDER COMPOSITION
Other corporations Financial institutions 0.46% 0.12% Individuals and Foreign others corporations, etc. Foreign Financial instruments 46.97% corporations, etc. business operators 19.90% Number of Number of 0.71% shareholders 0.12% shares 27,906 Other corporations 43,448,845 13.73%
Individuals Financial institutions Financial instruments and others 18.55% business operators (Treasury shares 0.00%) 98.59% (Treasury shares 0.00%) 0.85%
STOCK PRICE RANGE / MONTHLY TRADING VOLUME
(Yen) 4,500
4,000
3,500
3,000
2,500
2,000
(Shares) 1,500 20,000,000 15,000,000 1,000 10,000.000 500 5,000,000 0 0 2013 2014 2015 2016 2017 2018 4 56789 10 11 12 123 4 56789 10 11 12 123456789 10 11 12 1 2 3456789 10 11 12 123456789 10 11 12 123
29 TORIDOLL Holdings Corporation
MAIN OFFICE 11F, Nihon-Seimei Sannomiya-eki-mae Bldg., 1-1 Onoedori 7-Chome, Chuo-ku, Kobe 651-0088, JAPAN
TOKYO HEADQUARTER 22F, Gate City Osaki West Tower, 11-1 Osaki 1-Chome, Shinagawa-ku, Tokyo 141-0032, JAPAN