FINANCIAL RESULTS FISCAL YEAR 2016 - Major brands include all-you-can-eat shabu shabu SHABU SAI, natural food buffet HARVEST, and DESSERT PARADISE. 7 ©1996,2016 SANRIO CO.,LTD.TOKYO.JAPAN

FINANCIAL RESULTS FISCAL YEAR 2016

April 19, 2016

create restaurants holding inc.

Highlights of Results for Fiscal 2016

COPYRIGHT © create restaurants holdings inc. All Rights Reserved. 1

Overview of

Financial

Results

Growth Strategy

Forecast for

FY 2017

Net sales were 103.2 billion yen (up 49.0% year on year), ordinary income was 7.3 billion yen

(up 67.4% year on year), net income was 3.3 billion yen (down 48.9% year on year), sales from

existing stores were 100.7% year on year, and the number of stores at the end of FY 2016 was

795.

Implement “Group Federation Management” for further growth. “VISION 2020” was established

as medium- to long-term targets.

Net sales of 118.0 billion yen (up 14.3% year on year), ordinary income of 7.9 billion yen (up

7.6% year on year), net income of 4.2 billion yen (up 26.4% year on year) => Increase in sales

and ordinary income for three consecutive years is expected.

- Net sales exceeded 100 billion yen for the first time in the 19 years since the business was established. Ordinary

income increased significantly and reached a new record high.

- 108 new stores were opened. There was an increase of 109 stores due to M&A. 38 stores were closed down.

- Aim for net sales of 200 billion yen by FY 2020 by implementing the three growth scenarios (1. organic store

openings in domestic and overseas businesses, 2. M&A in Japan, and 3. Further overseas expansion).

- Despite a decrease in the number of months for SFP consolidation (from 14 months to 12 months) in addition to 99

new stores that opened, an increase in sales and profit is expected based on KR’s full-year contribution (increase of

approx. 9.0 billion yen) from FY 2016 and growth in profit from overseas businesses, etc.

2

Contents

I. Financial Results for Fiscal 2016 1. Financial Results Overview

2. Opening and Closing of Stores

3. Comparison with Previous Year’s Results (Consolidated)

4. Sales & Profit of Individual Categories: (1), (2), (3) and (4)

5. Comparison with Forecasts (Consolidated)

II. Earnings Forecast of Fiscal 2017 1. Overview of Earnings Forecast

2. Sales & Profit Forecasts of Individual Categories

III. VISION 2020 – Aiming for Net Sales of 200 Billion Yen in Three Years 1. Medium-Term Management Plan (Numeric Target)

2. VISION 2020: Growth Scenarios

3. VISION 2020: Net Sales Growth Image

4. M&A Strategy

5. Financial Policy for M&A

IV. Returns to Shareholders 1. Dividend Policy

2. Shareholder Special Benefit Plan

COPYRIGHT © create restaurants holdings inc. All Rights Reserved.

3 COPYRIGHT © create restaurants holdings inc. All Rights Reserved.

Ⅰ. Financial Results for Fiscal

2016

(Unit: Million yen)

FY 2/2016

Result

Ratio to net

sales

FY 2/2015

(previous year)

Ratio to

net sales YoY

Forecast for

FY 2/2016

Ratio to

net sales

Ratio to

forecast

Net Sales 103,271 – 69,309 – 149.0% 102,000 – 101.2%

Operating Income 6,749 6.5% 4,164 6.0% 162.1% 6,600 6.5% 102.3%

Ordinary Income 7,340 7.1% 4,383 6.3% 167.4% 7,200 7.1% 101.9%

Net Income 3,321 3.2% 6,495 9.4% 51.1% 4,000 3.9% 83.0%

Ordinary income before

amortization of goodwill 8,167 7.9% 5,024 7.2% 162.6% 8,070 7.9% 101.2%

1. Financial Results Overview

4

[Trends in Net Sales and Ordinary Income] (Unit: Million yen)

‣ About sales - Sales at existing stores remained strong [year-on-year sales at

existing stores: 100.7% (forecast 99.4%)]

- New stores opened as planned (108 new stores opened)

- Two companies with 109 stores joined the Group through M&A.

‣ Ordinary income - Strong performance of SFP and start of KR consolidation

resulted in significantly increased profit.

‣ Net income - Elimination of a gain on change in equity (SFP’s IPO) in FY

2015 (-6.4 billion yen), etc.

Net sales (103.2 billion yen) and ordinary income (7.3 billion yen) reached new highs.

Net sales exceeded 100 billion yen for the first time in the 19 years since the

business was established.

(Unit: Million yen)


Category

Total no. at

previous

year's end

Increase/decrease Transferred

inside the

Group

Total no. at

current

year's end New Closed

CR 364 45 20 -8 381

SFP 137 39 0 － 176

Specialty Brand 82 111 9 +8 192

(Via M&A during

current year) (98) (0) － (98)

Overseas 33 22 9 － 46

(Via M&A during

current year) (11) (2) － (9)

Group Total 616 217 38 － 795

[No. of units opened and closed at the end of February 2016]

2. Opening and Closing of Stores

5

Opened new units by consistently implementing the “location x brand” combination, which has a high success rate

Stores opened smoothly as planned.

Suburban roadside

12.8%

Station

buildings 6.1%

Department stores

3.3% Overseas 3.0%

Suburban malls

29.6%

Urban malls, etc.

19.0%

Urban street

front districts

26.3%

‣ (1) New stores were 108 units (up 9 units from the plan) + 109 units via M&A => Total 217 units, (2) Closed 38 units =>

Increased 179 units from the end of the previous year.

‣ Group-wide total: 795 units at the end of February 2016 (including businesses operated under consignment, franchised

stores, and overseas joint ventures) =>Smoothly as planned (forecast was 796 stores)

*1: The group totals shown in these materials for all categories include all the licensed businesses, franchised stores,

unconsolidated stores, and overseas joint ventures as of the end of February 2016. They differ from the consolidated group

totals reported in the statement of accounts.

*2: The total number at the end of the year for the overseas category includes: 3 unconsolidated units in Taiwan, 12 joint venture

units of an affiliated company, and 2 units of a franchised store at EW’s Jakarta venture

*3: For the number of units via M&As for the current fiscal year, 106 units of KR Food Service (KR), which became a consolidated

subsidiary in June 2015, are stated (Japan: 95 units, Overseas FC: 11 units (includes 2 stored that closed) and 3 units of RC

Japan (RCJ) that became a consolidated subsidiary in August 2015 is presented.

*4: “Transferred inside the Group” indicates the sum of the number of stores taken over by Gourmet Brands Company Inc.

established through a joint incorporation-type split (simplified demerger) as of March 6, 2015, and the roadside stores of Create

Restaurants (CR) transferred to KR.

[Breakdown of stores by location

(As of the end of February 2016)]


69.3 billion yen

103.2 billion yen

7.34 billion yen

4.38 billion yen

FY 2016

(Result)

FY 2015

(Previous Year)

FY 2015

(Previous Year)

FY 2016

(Result)

3. Comparison with Previous Year’s Result

(Consolidated)

6

+33.9 B

yen

+2.95 B

yen

Successful opening of new stores of SFP and contribution based on consolidation of

KR through M&A resulted in increased net sales and ordinary income.

Net Sales

Ordinary

Income *1

2.8 B yen Specialty Brand Overseas

Others

(EW)

(YUNARI)

(3.3 B yen)

(2.3 B yen) 60 M yen

25.1 B yen

(KR) (15.5 B yen)

CR 36.1 B yen

SFP 22.2 B yen

Specialty Brand 8.2 B yen

(EW) (3.6 B yen)

(YUNARI) 1.7 B yen

Overseas 2.4 B yen

Other 50 M yen

CR 39.0 B yen

SFP 36.0 B yen

CR SFP

CR SFP

3.53 B yen

3.46 B yen

2.12 B yen

4.34 B yen

Specialty Brand 490 M yen

Overseas (-) -140 M yen

Overseas 160 M yen

Specialty Brand 1.73 B yen

(YUNARI) 260 M yen

(KR) (810 M yen)

Others (-) -2.38 B yen

(YUNARI) (230 M yen)

(EW) (10 M yen)

(EW) (210 M yen)

Others (-) -1.63 B yen

*1: Graph reflects category income (Category income: Ordinary income after deducting expenses such as management fees and

consignment expenditures payable to holdings)

*2: "Other" consists primarily of head office expenses and amortization


(Unit: Million yen)

FY 2/2016

Result

FY 2/2017

Forecast Difference

Net Sales 39,084 40,503 +1,419

Category Income 3,469 3,885 +416

Income Rate 8.9% 9.6% +0.7%

(Unit: Million yen)

FY 2/2015

(previous year)

FY 2/2016

Result Difference

Net Sales 36,192 39,084 +2,892

Category Income 3,537 3,469 -68

Income Rate 9.8% 8.9% -0.9%

4. Sales & Profit of Individual Categories (1)

[Looking back at FY 2/2016]

Existing stores performed well [year-on-year sales at existing stores: 101.5% (forecast:

99.9%)]

Stores, particularly of high-end brands in central Tokyo, remained strong thanks to booming

inbound tourism, demand of companies, etc.

Demand for consumption in stores in suburbs and country areas decreased (stores in

Okinawa, etc.)

→In response, a low-price buffet was introduced for weekday lunches and net sales

increased, but profitability declined.

The number of stores at the end of FY 2016 was 381, including 45 new stores less 20 stores

that were closed.

Topics: Development of Pom Pom Purin Café (Sanrio’s character),

restaurants specializing in roasted beef rice bowls, etc.

[Assumptions in the forecast for FY 2/2017]

The opening of 27 new stores and the closure of 20 stores (including the closure

of 16 stores at food courts under unified operation) are planned.

Profit will be raised through the development of the roasted beef rice bowl

restaurants that are often inquired about by developers and repricing at

commercial facilities in central Tokyo and suburban areas with good markets.

- Comprises restaurants operated by Create Restaurants (CR).

- Operates multi-brand restaurants and food courts primarily inside suburban malls.

- Major brands include all-you-can-eat shabu shabu SHABU SAI, natural food buffet HARVEST, and DESSERT PARADISE.

7

©1996,2016 SANRIO CO.,LTD.TOKYO.JAPAN○L

The profit remained flat due to a decline in profitability of some stores in suburban areas despite strong net sales,

particularly from existing stores in urban areas and high-end brands.

CR Category


FY 2/2016 (14

months)

FY 2/2017

Forecast Difference

(Unit: Million yen)

March 2015

through

February 2016

(12 months)

Net Sales 36,091 31,697 38,300 +2,209

Category Income 4,349 3,904 4,100 -249

Income Rate 12.1% 12.3% 10.7% -1.3%

(Unit: Million yen)

FY 2/2015

(previous year)

FY 2/2016

Result Difference

Net Sales 22,288 36,091 +13,803

Category Income 2,126 4,349 +2,223

Income Rate 9.5% 12.1% +2.5%



In addition to active store openings of ISOMARU-SUISAN with strong sales (37 new stores

were opened*), Toriyoshi Shoten was established as a new brand (5 new stores; the total

number of stores at the end of FY 2016 is 9).

While year-on-year sales at existing stores for the five months between October 2015 and

February 2016 were 98.2% due to a reactionary fall from the new store boom, year-on-year

sales at existing stores operating for more than 18 months were 99.3% (source: SFP’s

materials for financial reports).

In addition to strong sales at new stores, the full-year contribution of stores that were

opened in FY 2015 helped improve profitability.

The total number of stores at the end of FY 2016 was 176, including 39 new stores (*) and

zero closures.

Topics: 1) Change of accounting period (consolidated 14 months)

2) SFP enhanced its returns to shareholders

(new dividend provided and improved special benefits).


The opening of 41 new stores is scheduled.

Mostly new ISOMARU-SUISAN and Toriyoshi Shoten stores.

Despite a reactionary fall from the new store boom, increased sales are

expected from existing stores with a significant contribution of the full-

year operation of stores opened in FY 2016 and new stores opening in

FY 2017.

Meanwhile, decreased profit is expected due to the reduced number of

months for consolidation (from 14 months to 12 months).

SFP Category - Comprises restaurants operated by SFP Dining (SFP).

- Entered into capital alliance in April 2013, operated izakaya-style restaurants in downtown districts.

- Major brands include seafood izakaya ISOMARU-SUISAN and poultry specialty restaurant TORIYOSHI.

8

* The number of new stores represents that for 14 months from January 2015 to February 2016

due to change of accounting period of SFP in FY under review.

The total number of stores at the end of FY2016 (39) represents that for the accounting period

(March 2015 to February 2016) of the Company

In addition to ISOMARU-SUISAN proving successful and new stores under new brands (44 stores*), the full-year

contribution of stores that were opened in FY 2015 and the change of the accounting period resulted in the

substantial growth of sales and profit.


(Unit: Million yen)

FY 2/2016

Result

FY 2/2017

Forecast Difference

Net Sales 25,198 35,816 +10,618

Category Income 1,739 2,081 +342

Income Rate 6.9% 5.8% -1.1%

(Unit: Million yen)

FY 2/2015

(previous year)

FY 2/2016

Result Difference

Net Sales 8,292 25,198 +16,906

Category

Income 499 1,739 +1,240

Income Rate 6.0% 6.9% +0.9%



KR joined the Group and Kagonoya performed well, mostly as planned, and smooth store

openings at SAPA locations (Shizugatake SA, Okazaki SA, and Nagashino Shitaragahara

PA) contribute to sales.

The number of stores at the end of FY 2016 was 192, including 13 new stores and 98 added

through M&A, less 9 stores that were closed.

Topics: KR and RCJ were made subsidiaries on June 30 and August 31, 2015, respectively.

As part of PMI after M&A, KR implemented system renewal, distribution restructuring,

head office relocation, etc.


The opening of 23 new stores and the closure of 6 stores (incl. 4 under operation

contract) are planned.

KR starts full-year contributions in FY 2017 (4 months, approx. 9 billion yen), and KR

and YNR will actively open new stores.

Profitability will decline due to opening expenses for an increase in new stores (13

stores -> 23 stores) and reduced non-operating income (compensation for CK’s

closed stores).

Specialty Brand

Category

- Comprises restaurants operated by eight domestic subsidiaries (Create Kissho (CK), Lemonde des Gourmet (LG), Eat Walk

(EW),YUNARI (YNR), Shanghai Bishoku Chushin (SBC), Gourmet Brands Company (GBC), KR Food Service (KR), and RC Japan

(RCJ)

- Operates Kagonoya mostly on roadsides of suburban areas and KISSHO, TANTO TANTO, Awkitchen, TSUKEMEN TETSU,

NANSHO MANTOUTEN, Jean Francois, etc. in urban commercial facilities.

9

In addition to the consolidation of KR starting in July in the fiscal year under review (8 months), smooth new

openings, etc. of KR and YNR led to a significant increase in sales and profit from FY 2015.


(Unit: Million yen)

FY 2/2016

Result

FY 2/2017

Forecast Difference

Net Sales 2,832 3,380 +548

Category Income 164 246 +82

Income Rate 5.8% 7.3% +1.5%

(Unit: Million yen)

FY 2/2015

(previous year)

FY 2/2016

Result Difference

Net Sales 2,483 2,832 +349

Category Income -147 164 +311

Income Rate ― 5.8% ―



Sales in Singapore and Hong Kong remained strong.

Unprofitable stores in China (Shanghai) were closed according to the plan => turned to

surplus in FY 2016.

The number of stores at the end of FY 2016 was 46, including 11 new stores and 11

added through M&A, less 9 stores that were closed.

Topics: TSUKEMEN TETSU (YNR’s first overseas store) and Pom Pom Purin Café

opened in Hong Kong in November and December 2015, respectively.


The opening of 8 new stores and the closure of 3 stores are

scheduled.

In addition to an increase in sales and profit expected in

Singapore and Hong Kong, Taiwan will be newly consolidated.

The first store will open in North America (NY), most likely in FY

2017.

Overseas Category - Operates in Singapore, Hong Kong and mainland China.

- Operates brands such as SHABU SAI and MACCHA HOUSE primarily inside commercial facilities.

10

In addition to the strong performance of Singapore and Hong Kong, the closure of unprofitable stores

in China as planned resulted in a surplus in FY 2016.


FY 2/2016

Result

Forecast for

FY 2/2016

FY 2/2015

(previous year)

Ratio to

forecast YoY

FY 2016

Result

Forecast for

FY 2/2016

FY 2/2015

(previous year)

Difference

from forecast

Difference from

previous year (Unit: Million yen)

Net Sales 103,271 102,000 69,309 101.2% 149.0% －－－ - -

Costs 29,769 29,223 19,370 101.9% 153.7% 28.8% 28.7% 27.9% +0.2% +0.9%

SG&A Expenses 66,751 66,176 45,774 100.9% 145.8% 64.6% 64.9% 66.0% -0.2% -1.4%

Operating Income 6,749 6,600 4,164 102.3% 162.1% 6.5% 6.5% 6.0% +0.1% +0.5%

Ordinary Income 7,340 7,200 4,383 101.9% 167.4% 7.1% 7.1% 6.3% +0.0% +0.8%

Net Income 3,321 4,000 6,495 83.0% 51.1% 3.2% 3.9% 9.4% -0.7% -6.2%

5. Comparison with Forecasts (Consolidated)

11

■Net Sales

Net Sales

+1,271 million yen

Ratio to forecast

+1.2%

- Existing stores outperformed the forecast [year-on-year sales at existing stores: forecast 99.4%, result 100.7%]

- New stores, particularly in the SFP category, opened as planned (forecast +9 stores)

■ Ordinary income and net income

Ordinary Income

+140 million yen

Net Income

-679 million yen

Ratio to forecast

+1.9%

Ratio to forecast

-17.0%

[Ordinary income]

- SFP category led the overall performance and exceeded the forecast.

[Net income]

- Increase in extraordinary losses: impairment of KR’s Thai JV shares, losses on disposal of assets due to head office

relocation (approx. 240 million yen), impairment of CR’s Okinawa stores (approx. 100 million yen), loss on sale of

shares due to business liquidation in China (approx. 40 million yen), etc.

- Increase in income taxes: change in recognition of sponsorship fees in tax affairs (effect is approx. 200 million yen,

only in FY 2016).

- Impact of differences between forecasts and results of CR and SFP: While the SFP category remained strong, the

CR category underperformed the forecast, making the contribution of SFP larger, the percentage of minority interests

higher, and causing profit to decrease (approx. 200 million yen).

Net sales from existing stores were stronger than expectations, and overall net sales exceeded the forecast.

While the SFP category led sales and ordinary income exceeded the forecast, extraordinary losses, etc. to improve

future profitability and the management base resulted in net income below the forecast.



Ⅱ. Earnings Forecast of Fiscal

2017

Category Total no. at

previous year's end

Increase/decrease Expected number

of stores at the end of FY 2017

New Closed

CR 381 27 20 388

SFP 176 41 0 217

Specialty Brand 192 23 6 209

(portion of M&A) (98) (0)

Overseas 46 8 16 38

(portion of M&A) (9) (0)

Group Total 795 99 42 852

FY 2/2017

Forecast

FY 2/2016

(result) Difference YoY

FY 2/2017

Forecast

FY 2/2016

(result) (Unit: Million yen)

Net Sales 118,000 103,271 +14,729 114.3% - -

Costs 34,113 29,769 +4,344 114.6% 28.9% 28.8%

SG&A Expenses 76,286 66,751 +9,535 114.3% 64.6% 64.6%

Operating Income 7,600 6,749 +851 112.6% 6.4% 6.5%

Ordinary Income 7,900 7,340 +560 107.6% 6.7% 7.1%

Net Income 4,200 3,321 +879 126.4% 3.6% 3.2%

1. Overview of Earnings Forecast FY 2/2017

13

Net sales 118.0 billion yen (up 14.3% year on year) and ordinary income 7.9 billion yen (up 7.6% year on year).

Despite a decrease in the number of months for SFP consolidation (from 14 months to 12 months) in addition to 99

new stores to be opened, an increase in sales and ordinary income is expected for the third consecutive year based

on KR’s full-year contribution (increase of approx. 9.0 billion yen) from FY 2016 and growth in profit from overseas

businesses, etc.


Category

FY 2/2016

Result

FY 2/2017

Forecast Difference

Net Sales Category income Net Sales Category income Net Sales Category income

Million yen Composition

ratio Million yen Income ratio Million yen

Composition

ratio Million yen Income ratio Million yen

Composition

ratio

Million

yen

Income

ratio

CR 39,084 37.8% 3,469 8.9% 40,503 34.3% 3,885 9.6% +1,419 -3.5% +416 +0.7%

SFP 36,091 34.9% 4,349 12.1% 38,300 32.5% 4,100 10.7% +2,209 -2.5% -249 -1.3%

Specialty Brand 25,198 24.4% 1,739 6.9% 35,816 30.4% 2,081 5.8% +10,618 +6.0% +342 -1.1%

Overseas 2,832 2.7% 164 5.8% 3,380 2.9% 246 7.3% +548 +0.1% +82 +1.5%

CRH head office &

other expenses 65 0.1% -2,383 ‒ 0 0.0% -2,413 ‒ -65 -0.1% -30 ‒

TOTAL 103,271 ‒ 7,340 7.1% 118,000 ‒ 7,900 6.7% +14,729 +560

2. Sales & Profit Forecast of Individual Categories

14

Increased sales are expected from active new store openings of SFP, KR, and YNR and the full-year contributions of

stores that opened in FY 2016.

Profit in the SFP category will fall slightly due to the reduced number of months for consolidation.

The Specialty Brand category will contribute to profit through an increase in the number of months for KR

consolidation.

The Overseas category will establish a surplus by adding Taiwan to the consolidation.



Ⅲ.ＶＩＳＩＯＮ２０２０～Aiming for Net Sales of 200 Billion Yen

in Three Years～

(Unit: Million yen)

FY 2/2016

Result

FY 2/2017

Forecast

FY 2/2018

Forecast

FY 2/2019

Forecast

Net Sales 103,271 118,000 132,000 145,000

(Growth rate) (114.3%) (111.9%) (109.8%)

Ordinary Income 7,340 7.1% 7,900 6.7% 9,400 7.1% 10,600 7.3%

Net Income 3,321 3.2% 4,200 3.6% 5,300 4.0% 6,000 4.1%

(Reference)

Ordinary income before amortization of goodwill 8,221 8.0% 8,870 7.5% 10,360 7.8% 11,560 8.0%

(Unit: Million yen)

FY 2/2016

Result

FY 2/2017

Forecast

FY 2/2018

Forecast

FY 2/2019

Forecast

Net Sales 103,271 118,000 150,000 175,000

(Growth rate) (114.3%) (127.1%) (116.7%)

Ordinary Income 7,340 7.1% 7,900 6.7% 10,700 7.1% 13,000 7.4%

Net Income 3,321 3.2% 4,200 3.6% 6,100 4.1% 7,600 4.3%

(Reference)

Ordinary income before amortization of

goodwill 8,221 8.0% 8,870 7.5% 12,080 8.1% 14,630 8.4%

1. Medium-Term Management Plan

(Numeric Target)

Aim for net sales of 175 billion yen and ordinary income of 13 billion yen for FY 2/2019

by implementing the three growth scenarios.

16

(* Forecasts for FY 2/2017 are values excluding the impact of M&A.)

(Reference: Three-year plan excluding the impact of M&A)


2. VISION 2020: Growth Scenarios

No changes have been made to VISION 2020 announced on October 14, 2015.

Aiming for net sales of 200 billion yen in three years.

Three growth scenarios

17

(1) Organic store

openings (Businesses currently operating

in Japan and overseas)

(3) Further development

overseas

(2) M&As in Japan

Growth scenario Basic policy (concept) Higher sales

- Open about 90 stores a year.

- Reinforce store openings in the Specialty

Brand category.

- Track record of six M&As in the past four years

worth net sales of approx. 38.0 billion yen

- M&As to boost net sales by 30.0 billion yen

over the next three years.

- Develop business in North America and new

ASEAN regions.

- Use expertise in Singapore and Hong Kong.

- Set our sights on development that employs

the JV and FC method.

+60.0

billion yen

(15.0 billion

yen×4 years)

+10.0

billion yen

+30.0

billion yen

FY 2/2020 Net sales

200.0 billion yen!

FY 2/2016

Net sales

103.2 billion yen

+100.0

billion yen


0

500

1,000

1,500

2,000

2,500

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Overseas

Net sales (M&A)

Net sales (Specialty B)

Net sales (SFP)

Net sales (CR)

Net sales 200.0

billion yen

Net sales

103.2

billion yen

Overseas

M&A

CR

SFP

Specialty

B

(Forecast)

3. VISION 2020: Net Sales Growth Image

18

Organic store openings

Conduct M&As in Japan

Further development

overseas

Aiming for net sales of

200.0 billion yen in FY

2020!


< Four decision criteria > • Brands that can be extended

to many stores • High profitability based on

the competitive advantage • Potential for continuous

growth of sales and profit • Passion of managers

(2) M&A type “non-core business

acquisition”

(1) M

&A

typ

e “e

xit fro

m fu

nd

s, e

tc.”

(3) M

&A

typ

e “a

llian

ce

with

fou

nd

er/o

wn

er”

Evaluation

Evaluation Evaluation

4. M&A Strategy

- Primarily, three routes are considered as the

sources of M&A projects.

(1) Exit from funds, etc. [SFP, KR]

(2) Non-core business acquisition [LG, RCJ]

(3) Alliance with founder / owner [EW, YNR]

- Four M&A decision criteria

(1) Brands that can be extended to many stores

(2) High profitability based on the competitive

advantage

(3) Potential for continuous growth of sales and

profit

(4) Passion of managers

< Image of M&A examination >

- A number of projects proposed will be carefully

examined based on the four criteria.

19

Continue to examine M&As by focusing on good targets while aiming to

achieve VISION 2020.


(*1) Acquired shares held by CRH from Mitsubishi

Corporation through TOB of the Company’s shares.

(*2) Acquired SFP Dining and EW through M&A

(*3) Acquired YNR through M&A, and SFP Dining

launched IPO in TSE Sec. 2.

(*4) Acquired KR Food Service through M&A

5. Financial Policy for M&A

✓Changes in Net D/E Ratio

(Times) (Million yen)

✓Changes in Net Interest-Bearing Debt to Cash Flow Ratio

(Times) (Million yen)

20

While net interest-bearing debts increased due to the acquisition of KR shares, etc., the

net D/E ratio and the net interest-bearing debt to cash flow ratio are maintained at low

levels.

Ensure bankability to implement new M&A

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Net interest-bearing debt (million yen) 2,862 1,929 4,345 12,583 2,393 18,265

Cash flow from operating activities (million yen) 3,381 2,936 3,602 4,568 6,298 10,353

Equity capital (million yen) 5,180 6,127 3,745 9,332 15,249 17,502

Net D/E ratio (times) 0.55 0.31 1.16 1.35 0.16 1.04

Net interest-bearing debt to cash flow ratio 0.85 0.66 1.21 2.75 0.38 1.76

(*1) (*2) (*3) (*4)



Ⅳ. Returns to Shareholders

* A 1-to-3 common stock split was carried out on September 1, 2014, and March 1, 2016. The amount of the annual dividend

has therefore been corrected retroactively, taking into account the stock splits.

* During FY 2015, a gain on change in equity of SFP associated with IPO was recognized as extraordinary income, which

resulted in an increase in net income and a decline in the consolidated dividend payout ratio.

1. Dividend Policy

22

Basic policy: Pay stable dividends based on a consolidated dividend payout ratio of approximately 30%.

Dividends for FY 2016 will be an interim dividend of 16.5 yen (already paid) and a year-end dividend of 18.5 yen,

totaling 35.0 yen as the annual dividend.

Dividends for FY 2017 are expected to be 6.5 yen each for the interim and year-end dividends, totaling 13.0 yen as

the annual dividend.

(Reference: dividend before adjusting for share split is 39.0 yen/year)

8th consecutive dividend increase is scheduled.


Forecast Result

Interim: 6.50 yen

Fiscal year-end: 6.50 yen

Number of shares

owned Content of special benefits

End of Feb. End of Aug. Annual

100 shares or more

Less than 500 shares

Meal tickets

worth 3,000 yen

Meal tickets

worth 3,000 yen

Meal tickets

worth 6,000 yen

500 shares or more

Less than 1,500 share Meal tickets

worth 6,000 yen

Meal tickets

worth 6,000 yen Meal tickets

worth 12,000 yen

1,500 shares or more

Less than 4,500 shares

Meal tickets



worth 30,000 yen

4,500 shares or more Meal tickets



worth 60,000 yen

2. Shareholder Special Benefit Plan

23

The special benefit plan was enhanced due to the stock split (1:3) carried out

with the record date of February 29, 2016.


Reference

Data

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Goodwill balance 25 45 9,369 7,876 15,385

Amortization of goodwill 42 33 364 640 827

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Change in number of

stores -15 +31 +138 +86 +179

Number of new stores

(portion of M&A) 19 53 (7) 169 (108) 128 (26) 217 (109)

Number of stores

closed 34 29 36 42 38

Number of stores at the

end of FY 361 392 530 616 795

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Net assets per share 44.45 46.10 98.87 161.55 185.42

Net income per share 9.54 11.94 20.41 68.82 35.19

Dividend per share 2.78 5.33 7.33 7.56 11.67

Dividend payout ratio 29.1% 44.7% 35.9% 11.0% 33.2%

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Cash flow from

operating activities 2,936 3,602 4,568 6,298 10,353

Cash flow from

investing activities -2,018 -2,604 -10,135 -8,078 -20,540

Cash flow from

financing activities 1,218 441 4,824 10,239 11,542

FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Net sales 34,624 37,167 52,523 69,309 103,271

Ordinary income 3,558 2,827 3,796 4,383 7,340

Net income 1,314 1,317 1,811 6,495 3,321

EBITDA 3,817 4,044 5,984 7,441 11,295

Total assets 16,514 19,047 35,819 47,034 72,530

Net assets 6,127 3,744 9,332 19,676 22,996

Net interest-bearing

debts 1,928 4,345 12,583 2,393 18,265

Equity ratio 37.1% 19.7% 26.1% 32.4% 24.1%

ROA 8.7% 7.4% 6.6% 15.7% 5.6%

ROE 23.3% 26.7% 27.7% 52.9% 20.3%

Net D/E ratio (times) 0.31 1.16 1.35 0.16 1.04

Year-on-year sales at

existing stores 94.4% 100.5% 100.8% 99.6% 100.7%

* A 1-to-3 common stock split was carried out on September 1, 2014, and March 1, 2016. Net assets per share, net income

per share, dividend per share, and dividend payout ratio have therefore been corrected retroactively, taking into account the

stock splits.

Major Management Indicators

25

[Major management indicators (in million yen)]

[Number of stores]

[Per-share data (in yen)]

[Changes in cash flow (in million yen)]

[Changes in goodwill (in million yen)]


“Group Federation Management” (1):

High Growth Achieved through Active M&A

26

Net sales doubled in two years through active M&A in addition to organic growth.


March 2012

April 2013

August 2015

April 2014

June 2015

Combine a variety of locations with specialties = Sustainable growth based on a strong portfolio

“Group Federation Management” (2):

Group Federation Management that Maximizes the Strengths of

Acquired Companies

27

立地 (ロケーション)

専門性

(

ブランド)

商業施設立地繁華街/駅前ロードサイド

国内海外

中華圏北米

海外事業会社海外拠点の拡充

新規M&A

ASEAN

：従来のビジネス領域

：グループ入後のビジネス領域

Location

Sp

ec

ialty

(Bra

nd

)

Commercial

facilities

Urban street front districts

Suburban

roadside

Overseas

Greater

China

North

America

Overseas companies Enhancement of

overseas bases

New M&As

ASEAN

Existing business domains

Business domains after

entering the Group Japan


Disclaimer

28

<<For inquiries regarding IR>>

Corporate Planning Division IR Team 03-5488-8022

The purpose of this material is to provide information regarding the financial

results of the fiscal 2016 and is not intended to solicit investment in securities

issued by the Company.

Furthermore, although the contents in this material is prescribed based on

reasonable assumptions of the Company at the time of publication, it does not

warrant or guarantee the information’s accuracy or completeness and is

subject to change without prior announcement.


FINANCIAL RESULTS FISCAL YEAR 2016 - Major brands include all-you-can-eat shabu shabu SHABU SAI, natural food buffet HARVEST, and DESSERT PARADISE. 7 ©1996,2016 SANRIO CO.,LTD.TOKYO.JAPAN

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