Aderans Holdings Co., Ltd. 40Th Fiscal Year Shareholders’ Meeting
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Securities code: 8170 Address: 6-3, Shinjuku 1-chome, Shinjuku-ku, Tokyo Representative: Kiyoshi Hayakawa, President April 30, 2009 Aderans Holdings Co., Ltd. 40th Fiscal Year Shareholders’ Meeting We are pleased to invite you to our shareholders’ meeting for the fiscal year ended February 28, 2009. Details about the meeting are presented below: Please bring your voting form with you. If you are unable to attend the meeting, we encourage you to exercise your right to vote by proxy. To do this, please read the enclosed Guide to Voting, mark the voting form with your instructions and send it back to us. The proxy form must reach us by 6:00 pm, Wednesday, May 27, 2009. Date: Thursday, May 28, 2009, at 10:00 a.m. Location: Sumitomo Realty & Development Nishi-Shinjuku Park No. 3 Building, 1st Floor, Belle Salle Nishi-Shinjuku Hall 15-3, Nishi-Shinjuku 4-chome, Shinjuku-ku, Tokyo Reports on:1. Business report, and consolidated financial statements, as well as auditors’ reports on the consolidated financial statements, from the external auditing company and Aderans Holdings’ Board of Auditors, for the 40th fiscal year, ended February 28, 2009. 2. Financial Statements for the 40th fiscal year, ended February 28, 2009 Agenda and referenced items Proposal by the company Agenda 1. Appropriation of Retained Earnings 2. Partial Amendments to the Articles of Incorporation 3. Election of seven (7) Directors 4. Election of two (2) Corporate Auditors 5. Allocation of Treasury Stock to Tender Offer Proposal by shareholder 6. Election of eight (8) Directors 1 Other Resolutions for Convocation (1) Notification method in the event of non-uniform exercise of voting rights In the event you are to exercise available voting rights in a non-uniform manner, the Company asks that you provide written notice of your intention and the reason for non-uniform exercise of voting rights at least three days before the date of the general shareholders’ meeting. (2) Exercise of voting rights by proxy In regard to the exercise of voting rights by proxy, the Company asks that you call upon another shareholder holding voting rights in the Company to act as proxy in exercising your voting rights. Please be advised that a document verifying power of representation on your behalf will have to be presented. END 〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰〰 Your Exercise of Voting Rights Form is enclosed. Please bring it with you to the general shareholders’ meeting and present it to reception. If changes are made to Guide to Voting, business reports, financial documents or consolidated financial documents, the revised versions will be uploaded to the Company’s web site, at http://www.aderans.co.jp/hd/english/index.html This document is a translation of the Japanese language original. It has been prepared as a guide for non-Japanese investors and contains forward-looking statements that are based on managements’ estimates, assumptions and projections at the time of publication. A number of factors could cause actual results to differ materially from expectations. 2 Business Report March 1, 2008 to February 28, 2009 1. Group Status (1) Operating environment and business results During the 40th fiscal year, ended February 28, 2009 (fiscal 2009), business sentiment remained poor in Japan. Concerns about the health of the financial system, originating in the U.S., spread to the financial and capital markets much faster and on a larger scale than expected, and the economy deteriorated rapidly, as exemplified by sluggish consumer spending due to a worsened employment environment and by sharp decreases in corporate earnings. Against this operating environment, the Aderans Group strived to increase corporate value by steadily carrying out execution measures toward achieving the numerical targets respectively set for the domestic core segment, the Fontaine segment, the overseas core segment and the hair- transplant segment, in accordance with its medium-term management plan that started in fiscal 2009. With regard to business results by business segment, in the domestic core business, sales to new male clients are on a recovery track as we had changed the focus of advertisements for men to products to increase hair, centering on custom-made wigs, since the beginning of the fiscal year. However, sales to new female clients decreased due to a sharp year-on-year decline in the number of inquiries, following the fall in the audience rating of television programs we sponsor and the drop in consumption. In the Fontaine business, sales in all sales routes, including department stores, our mainstay sales route, posted a year-on-year decrease, since consumer sentiment declined significantly in the Group’s target age groups. Overseas, earnings of the wig business — a core segment of operations — remained firm in North America, Europe and Asia, excluding Japan, thanks to the effects of the introduction of new products. The hair-transplant business showed little growth despite our efforts to expand demand mainly through advertising, since the economic conditions in the United States precipitated rapidly. Consequently, consolidated performance was as follows; net sales dropped 6.0% year on year, to ¥70,463 million, while operating income fell 38.3%, to ¥2,508 million, and recurring profit decreased 43.9%, to ¥2,472 million. The Aderans Group posted a net loss of ¥2,172 million (against a net income of ¥590 million in fiscal 2008), as it scored loss impairment on goodwill of ¥2,138 million and unrealized loss on investment securities of ¥1,504 million as extraordinary losses. Business results by region The activities of the Aderans Group are divided into two broad-based operating segments -- hair-related businesses and other businesses -- of which the hair-related business comprises more than 90% of aggregate net sales. Therefore, the Group’s performance is reported according to region rather than operating segment. 3 Japan Sales of custom-made wigs — the Group’s mainstay product category — dropped 12.6% year on year, to ¥25,102 million. This decline reflects the fact that while sales to new male clients were up, underpinned by intensive advertising activities for Aderans Hair Club, featuring a flat- rate system, sales to women significantly fell year on year partly because new products were not introduced for women. Sales of ready-made wigs fell 8.3%, to ¥9,630 million, as sales decreased in all sales routes because of the decline in consumer spending, although sales in this segment had expanded until the previous fiscal year. Revenue from other hair-related businesses decreased 5.6%, to ¥4,029 million. Service revenues slipped 0.4%, to ¥9,750 million. Revenue from other business dropped 3.5%, to ¥468 million. Intersegment sales soared 137.6%, to ¥278 million. Consequently, aggregate net sales from operations in Japan amounted to ¥49,260 million, down ¥4,620 million, or 8.6%, from fiscal 2008. Despite efforts, including a reduction of selling, general and administrative expenses centering on advertising expenses, aimed at neutralizing the effect of lower net sales, operating income tumbled 35.2%, to ¥4,177 million. Asia, excluding Japan In Taiwan, where sales are largely generated from clients outside the Aderans Group, more funds for advertising in the second quarter precipitated an upturn in sales, but the improvement was not enough to make up for a sluggish beginning to the fiscal year, and the retail subsidiary in Taiwan closed its books with results – lower sales and lower income. A breakdown of regional sales by product category reveals that custom-made wigs dropped 2.1%, to ¥232 million, ready-made wigs slipped 19.7%, to ¥57 million, and other hair-related products, fell 18.4%, to ¥40 million. Service revenues dropped 12.3%, to ¥100 million, and intersegment sales also dropped 14.9%, to ¥4,359 million. As a result, aggregate net sales from operations in Asia, excluding Japan, amounted to ¥4,790 million, down ¥804 million, or 14.4%. And operating income tumbled 52.8%, to ¥258 million. 4 North America Members of the Group involved in the wigs business secured higher sales of ready-made wigs by cultivating demand through the introduction of new products. However, the impact of yen appreciation caused sales on a yen basis to decrease 17.4% over fiscal 2008, to ¥2,414 million. Similarly, sales of custom-made wigs dropped 22.5%, to ¥282 million. Service revenues from hair transplant procedures edged up 1.6%, to ¥12,749 million, reflecting enhanced advertising campaigns, a review of prices, and better surgical techniques. Sales of other hair-related products jumped 128.6%, to ¥1,653 million, thanks to favorable sales of new products. Intersegment sales decreased 16.2%, to ¥1,454 million. Despite currency pressures, aggregate net sales from operations in North America improved in the end, up 1.4%, or ¥259 million, from fiscal 2008, to ¥18,554 million. On the operating income front, the wig business was the black. But the hair transplant business could not escape the red zone, because of increased selling, general and administrative expenses, even with concerted efforts to curb them in the second half. The operating loss therefore grew ¥377 million, to ¥934 million. Europe Sales of the Group’s unified European collection, which had been a priority target since the beginning of the term, continued to capture consumer attention. Sales of custom-made wigs increased 10.3%, to ¥512 million, while sales of ready-made wigs decreased 7.0%, to ¥2,627 million. Sales of other hair-related products retreated