Financial Results Presentation Materials for the Fiscal Year Ended - - PowerPoint PPT Presentation

BOOKOFF GROUP HOLDINGS LIMITED

(TSE First Section: 9278)

Financial Results Presentation Materials

for the Fiscal Year Ended March 2020 (FY3/2020)

June 18, 2020

1

Topics ・・・ 2 FY3/2020 Overview of Consolidated Financial Results ・・・ 7 Highlights of FY3/2020 ・・・ 15 Progress of the Medium-term Management Policies ・・・ 29 Impact of the COVID-19 Crisis ・・・ 47 Appendix ・・・ 56

Contents

*Financial data up to and including 1H FY3/2019 in these materials are consolidated figures for BOOKOFF CORPORATION.

Topics

Topics

3

Consolidated Sales

¥84.3 billion 104%

• Vs. FY3/2019

Ordinary Profit

¥1.89 billion 89%

• Vs. FY3/2019

Profit

¥0.24 billion 11%

• Vs. FY3/2019

Higher sales but lower profit Big decrease in profit mainly because of

• ne-time items in FY3/2019

4

3 stores

• pened

5 stores

• pened

2 stores

• pened in

Malaysia

97 directly

• perated existing

stores in Japan renovated

Topics

One-stop purchasing consultation desk

Restarted growth of the store network in FY3/2020 and renovations of existing stores are continuing

Topics

5

App members 1.55 million

Sell store inventory merchandise Store pick-up service

More than 1.55 million smartphone app members Progress continues with creating a store/EC omni-channel structure

6

Topics

Acquired Jewelry Asset Managers Inc., making the company a wholly owned subsidiary

FY3/2020 Overview of Consolidated Financial Results

8

Statement of Income

(Million yen)

FY3/2020

FY3/2019 YoY change (Amount) YoY change (Ratio)

Net sales

84,389

80,796 +3,593 104.4%

Gross profit

51,077

48,235 +2,841 105.9%

SG&A expenses

49,648

46,684 +2,963 106.3%

Operating profit

1,428

1,550

• 121

92.2%

Ordinary profit

1,898

2,120

• 222

89.5%

Profit attributable to

• wners of parent

240

2,172

• 1,932

11.1%

✓ Sales increased at directly operated existing stores in Japan and the conversion of franchised stores in Kyushu to direct operation and new store openings also contributed to sales growth. ✓ Small decreases in operating and ordinary profit mainly because of lower apparel sales, the result of the consumption tax hike and warm winter weather, and temporary store closings caused by typhoons. ✓ The big decline in profit attributable to owners of parent was partially the result of the reduction in income taxes in FY3/2019 because of group reorganization activities.

9

YoY Change in Net Sales

FY3/2019

¥80.7 billion

Up 2.3% YoY, including about ¥0.9 billion increase in EC sales

Directly operated existing stores in Japan HUGALL

Resumed activities in FY3/2020 for growth

• f this business

➢ 9 Kyushu stores converted from franchised to direct

• peration

➢ Acquired Jewelry Asset Managers Inc.

M&A

Net effect of new/closed stores in FY3/2019 and FY3/2020

Others

～ ～

E-commerce center Effect of links between store/e-commerce inventories

+0.75 +1.25 (0.41) +0.74

Opening and closing

• f directly operated

stores in Japan

+1.40 (0.13) FY3/2020

¥84.3 billion

10

YoY Change in Ordinary Profit

FY3/2019

¥2.12 billion

FY3/2020

¥1.89 billion

No loss as in FY3/2019 + Start of profitability HUGALL

➢ Slow apparel sales caused by the consumption tax hike and warm winter weather reduced the gross profit margin ➢ Temporary closings caused by typhoons impacted earnings

IT investments, TV commercials/PR activities, M&A and other expenses involving the “One BOOKOFF” concept Corporate Directly operated existing stores in Japan Cost reductions and other benefits

• f group

reorganization measures Store start-up expenses due to resumption of new store openings Others

+0.64 (0.50)

Strategic investments

(0.50) (0.06)

Opening and closing of directly

• perated stores +0.18

+0.01

11

Effect of Unification of Classification Method for Purchasing Expenses

(Million yen)

FY3/2020

% to sales

Net sales

84,389

100.0%

Cost of sales

33,312

39.5%

Gross profit

51,077

60.5%

SG&A expenses

49,648

58.8%

Operating profit

1,428

1.7%

FY3/2020

% to sales

84,389

100.0%

34,535

40.9%

49,853

59.1%

48,245

57.4%

1,428

1.7%

Using the previous classification method

The new classification method reduced gross profit by ¥1,223 million

1.4% of net sales

The entire BOOKOFF Group is using a single method for the classification of purchasing (merchandise procurement) expenses. This change is the result of mergers and other reorganization activities based on the “One BOOKOFF” concept and progress with store/EC omni-channel measures. Due to this change, which started in 4Q FY3/2019, some expenses that were included in the cost of sales are now classified as SG&A

• expenses. This change has no effect on the operating profit margin.

An adjusted 0.6 point

decrease from

59.7% in FY3/2019

12

Reasons for the Big Decrease in Profit

FY3/2019 Profit

¥2.17 billion

Decrease in

• rdinary profit

¥(0.22) billion

Decrease in extraordinary income

¥(0.14) billion

Increase in extraordinary losses

¥(0.51) billion

Impairment loss increased ¥0.31 billion from one year earlier due to COVID-19 and other factors Loss on retirement of non-current assets increased ¥0.1 billion from one year earlier due to the consolidation and closing of distribution centers Increase in income taxes

¥(1.03) billion

In FY3/2019, there was a one-time reduction about ¥1 billion in income taxes associated with group reorganization activities

Profit

¥0.24 billion

Other ¥(0.02) billion

✓ Extraordinary losses of ¥1.015 billion, including impairment loss and loss on retirement of non-current assets (up ¥0.512 billion from FY3/2019) ✓ Big decrease in profit attributable to owners of parent due to a reduction in taxes associated with group reorganization measures in FY3/2019

13

Balance Sheet

✓ Non-current assets and liabilities increased primarily because of expenditures for new stores and IT systems, and M&A activity for the acquisition of franchised stores.

17,120 13,307 16,882 13,006 17,830 12,848 30,762 34,574 23,765 27,640 23,704 28,687 As of Mar. 31, 2018 As of Mar. 31, 2019 As of Mar. 31, 2020 Ordinary profit

1,092 2,120 1,898

Treasury shares

1,255 2,343 2,343

Equity ratio

27.5% 31.6% 30.7%

ROA

(Ratio of ordinary profit to total assets)

2.2% 4.8% 4.6%

Current assets Non-current assets Liabilities Net assets (Million yen)

14

Statement of Cash Flows

✓ Operating cash flows increased mainly due to decline in income taxes ✓ Big increase in cash used in investing activities because of substantial expenditures for new stores and IT systems ✓ Big improvement in cash flows used in financing activities because of cash used one year earlier for the redemption of bonds with share acquisition rights

2,668 2,751 3,543 (940) (559) (2,744) (3,394) (9,895) (832) FY3/2018 FY3/2019 FY3/2020

Depreciation*

1,895 1,645 1,711

Interest-bearing debt

24,480 17,535 17,920

Interest-bearing debt-to-

• perating cash flow multiple

9.2 6.4 5.1

(Million yen)

Cash flows from financing activities Cash flows from investing activities Cash flows from

• perating activities

*Including amortization of goodwill

Highlights of FY3/2020

16

FY3/2020 Policy

End the group’s recovery phase and advance to consistent earnings growth. Make substantial investments to build a base for growth in the future.

Business operations ➢ Continue to operate stores focused on their local markets (upgrade individual stores) ➢ Continue progress with “One BOOKOFF” to advance and grow ➢ Make HUGALL profitable in FY3/2020 and take on new challenges Organization and people ➢ Use the regional headquarters structure for unified operations of directly operated and franchised stores ➢ Increase training budgets and programs to enable employees to realize their full potential

17

More Authority Shifted to the Regional Level with Reorganization

Regional business units Branch offices Franchisee Franchisee

Regional Headquarters

Franchisee Franchisee

Sendai office Nagoya

• ffice

Osaka office Fukuoka

• ffice

Tokyo sales department Omiya office

In the new organization, directly operated and franchised stores are no longer separate. Furthermore, regions have more authority in order to allow making decisions at a level that is closest to customers. With this organization, stores can take actions faster and directly operated and franchised stores can more easily share their know-how and people. Directly-Managed Business Franchise Business

Before Now

Directly

• perated

store Franchised store Franchised store Directly

• perated

store Directly

• perated

store Franchised store Franchised store Directly

• perated

store Directly

• perated

store Directly

• perated

store Franchised store Franchised store Franchised store Franchised store

18

Expanded and Upgraded Training Program

Business operations Specialized skills

Employee training is one of BOOKOFF’s greatest strengths. Programs have been expanded and upgraded to cover not only basic business activities, customer service and merchandise but also understanding strategies, senior management training and other subjects, more than 50 courses in all. Strategies Business skills Merchandise Customer service

◼ Basic training

• Management philosophy
• Basic operations
• Store management training
• New employee training
• Compliance

◼ Management courses

• Marketing
• Logical thinking
• Financial statement analysis
• Management

◼ Senior management courses

• Understanding strategies
• Industry analysis

◼ Books/software training

• Business climate analysis
• Recent advances in operations

◼ Merchandise category training

• Interacting with customers
• Brands
• Sports
• Pricing
• Authentication training
• Merchandise leader training

◼ Professional qualifications

• Support for national certifications
• Internal certification programs
• Beginning gemstone evaluation

course and others and others

19

Store Renovations

Jiyugaoka Station Store Increased sales of apparel, high-end brand items

Renovated 97 directly operated stores in Japan

Kitakyushu Tobata Ichieda Store Added a section for children Yamato Tsukimino Store Added hobby merchandise (including anime merchandise) Higashi Tokorozawa Store Added sporting and outdoor goods 50 Gou Mito Motoyoshida Store Exterior renovations Yokohama Vivre Store Added hobby merchandise (including anime merchandise)

✓ Adding merchandise reflecting local market characteristics and continuing the exterior/interior store renovation program that started in FY3/2019

20

95% 97% 99% 101% 103% 105% 107% Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.

Sales of Directly Operated Existing Stores in Japan

FY3/2020 FY3/2019 YoY change (Ratio) % to total sales

Books

100.1% 32.4%

Software media (CDs, DVDs and games)

104.2% 29.8%

Apparel

92.7% 11.9%

Precious metals/watches/ high-end brand items

109.1% 7.9%

Trading cards/hobby goods

112.4% 7.0%

Home appliances/mobile phones

97.1% 4.9%

Others

111.9% 6.1% Total 102.3% 100.0% ✓ FY3/2020 directly operated existing store sales increased 2.3% despite the negative impact of a natural disaster in October and COVID-19 in March. ✓ Sales of books, the main product category, remained firm and there was growth in sales of precious metals/watches, high-end brand items and trading cards/hobby goods as every store increased measures to sell products that match its local market. The already large share of software media sales became even higher in FY3/2020. ✓ Apparel sales decreased YoY in part because of unfavorable weather in FY3/2020.

FY3/2020

102.3%

• Oct. 2019

Negative effect

• f a typhoon

95.3%

• Mar. 2020

Impact of COVID-19 97.2%

YoY change in monthly sales Sales by product category

21

New Directly Operated Stores

Store format package

Store name Location Opening date

5 Gou Sapporo Miyanosawa Store Sapporo City, Hokkaido April 18 Ito-Yokado Nagareyama Store Nagareyama-City, Chiba April 25 Mito Himeko Store Mito City, Ibaraki October 3 Agro Garden Kobe Komagabayashi Store Kobe City, Hyogo November 28 25 Gou Yao Nagahata Store Yao City, Osaka December 12 Kyodo Nodai Street Store Setagaya-ku, Tokyo April 12 Hiroo Store Shibuya-ku, Tokyo July 13 Yoga Stn. North Exit Store Setagaya-ku, Tokyo October 5 Hikifune Store Sumida-ku, Tokyo July 6 M3 Mall Store Malaysia May 18 Kipmall Store Malaysia December 28

One-stop Purchasing Consultation Desk

22

As of Apr. 30, 2019

0.59 million

As of Sep. 30, 2019 As of Mar. 31, 2020

1.05 million

1.55 million

Number of app members

✓ At the end of March 2020, there were 1.55 million members for the smartphone app that was launched in June 2018. ✓ Switching conventional card members to smartphone app members raises the frequency and amounts of purchases. ✓ More functions, such as a new link with the BOOKOFF Online website. A new link!

Press the “Search merchandise” to place an EC order

“One BOOKOFF” Activities

◆Increase app members

23

Until now

Growth

Inventory searches Only EC warehouses

All stores in Japan

Merchandise pick-up Home delivery

Store pick-up and payment

＋ ＋

500 stores 600 stores

◆The omni-channel/O2O strategy for BOOKOFF Online website

“One BOOKOFF” Activities

✓ Create an omni-channel structure that covers the BOOKOFF Online website and stores. ✓ Currently expanding linkage to cover both directly operated and franchised stores.

24

YAHUOKU!

E-Commerce Sales

Up 10％

FY3/2019 FY3/2020

¥11.2 billion

◆Growth of BOOKOFF Group EC sales

✓ Linking BOOKOFF Online and store inventories has produced a big increase in the BOOKOFF Group’s e- commerce sales. ✓ Significant potential for more growth as more people become aware of BOOKOFF Online, which is currently not as well known as BOOKOFF stores

“One BOOKOFF” Activities

Combined sales

• f store/EC

inventories Merchandise is shipped from EC warehouses

96%

Note 1

Less than 20% Public Awareness

Note 1: Survey by MACROMILL Note 2: Survey by Rakuten Insight

Much potential

for more growth

Note 2

25

Started a Smartphone Merchandise Purchasing Option ◆Improvements in customer convenience and store productivity Bar code payments Big increase in number of stores using the e-purchasing system

“One BOOKOFF” Activities

Waiting time at a store Purchase method Purchase at a store Smartphone purchase Cash payment *Waiting times vary

Yes No

Any of these payment methods

BOOKOFF purchasing points

26

ACC Grand Prix Winner

Minister of Internal Affairs and Communications Award

＃ブックオフなのに 本ねーじゃん

✓ BOOKOFF used a TV commercial featuring child actor Kokoro Terada and other promotions to tell people that BOOKOFF is more than just books. ✓ These activities generated a strong SNS response and made many more people aware of the large assortment of merchandise that BOOKOFF buys and sells.

Musical instruments Home appliances Hobby merchandise Apparel

Before TV commercial After TV commercial Product category customer awareness

UP!

Commercial replays

More than 24 million

More Customers

–Tell People That BOOKOFF is Much More Than Books

In the April 2019 CM Soken Consulting awards, BOOKOFF’s TV commercials placed first in the retail/sales category for favorable impressions.

• No. 1

The name is BOOKOFF, but it’s not just books! 2019 59th ACC TOKYO CREATIVITY AWARDS #BOOKOFF, but no books?

27

667 917

984

126.0% 71.2%

57.6%

FY3/2018 FY3/2019 FY3/2020

BtoB

HUGALL Becomes Profitable

✓ Efficiency increased in FY3/2020 due to integration of logistics with EC

• perations and other actions

✓ Profitable in FY3/2020 because of improvements to dept. store purchasing

• perations

✓ Negative effect of the closing of the flagship purchasing desk at the Nihombashi Mitsukoshi dept. store was offset by the opening of new dept. store desks (Daimaru Tokyo, Daimaru Ashiya)

Decline in the purchase amount /purchasing expense ratio*

HUGALL became profitable in FY3/2020

because of reexaminations of purchasing

• perations and the logistics structure and measures

to strengthen dept. store purchasing activities.

million yen

Mainly affluent and wealthy customers

The HUGALL Flowchart

Purchase items at dept. store purchasing desks Sell items using the most suitable channel Stores E-commerce Internet auction site, etc.

*Expenses as pct. of prices paid to purchase items

YAHUOKU!

28

New Activities for Growth

aidect has 16 stores in department stores and shopping centers that provide comprehensive services for jewelry.

Jewelry Asset Managers Inc.

Customer base Workforce

Repair/restoration expertise Current BOOKOFF Group services

＋

Increases the Group’s added value

✓ Jewelry Asset Managers Inc. became a wholly owned subsidiary in September 2019. ✓ The customer base, skilled workforce, jewelry repair expertise and other strengths of this company give the BOOKOFF Group access to more customer segments. In addition, BOOKOFF can provide new services to its current customers by using repair, restoration and other aidect capabilities. This allows the Group to use an even broader array of activities to become Japan’s leading reuse company.

A stronger base for becoming Japan’s leading reuse company

*As of March 31, 2020

Progress of the Medium-term Management Policies

30

Celebrating our 30th anniversary

Stores, customers and society

For 30 years, BOOKOFF has been dedicated to

• perating highly appealing stores, providing
• utstanding customer services and being a

responsible member of society. Towards 2030, we are aiming for more growth by continuing to increase the number of BOOKOFF fans throughout Japan.

31

With Books as the Core Category, Aiming to Become Japan’s Leading Reuse Company

Baby goods Fashion Toys Home appliances Luxury-brand goods / precious metals Household goods Sporting goods

Picture books Comic books Magazines Practical books Novels A diverse merchandise selection that reflects customers’ life cycles, centered on books that appeal to people of all ages

32

Business Policy for Growth Strategies

Upgrade individual stores ✕ Use all group strengths to compete and win

33

Business Policy and Roles

Earnings

Use all group strengths to compete and win Upgrade individual stores

Merchandise Operations More customers IT systems

34

Hachioji Stn. North Exit Store More PCs and smartphones

Continued to add merchandise for local markets and renovate stores Upgrade Individual Stores

–Continue to Create Stores That Match Local Markets

Kofu Heiwa Street Store Added hobby merchandise Musashi Koyama PALM Store Repainted store exterior More children’s books and other books Chigasaki Stn. North Exit Store Added apparel and beach merchandise

35

Suburban store Urban store

Upgrade Individual Stores –Resume Opening Stores Rapidly

One-stop Purchasing Consultation Desk

✓ Small shops mainly near major city-center railway stations ✓ A reuse purchasing specialist provides information and purchase prices at a store counter ✓ Purchases include books/software as well as many

• ther types of reuse items

Planning on growth from the current 16 stores (as of Mar. 31, 2020) to 50, mainly in the Tokyo area

✓ A comprehensive large-format reuse store (1,650 to 3,300m2) unlike any other retail format in Japan ✓ Enormous inventory volume and merchandise selection attracts large numbers of customers

Plan to open 4 to 5 stores every year, mainly in suburbs of large cities

36

Use All Group Strengths to Compete and Win

–The “One BOOKOFF” Concept

Create positive experiences Create reasons to return to stores

E-commerce Membership (apps) E-purchasing

➢ Shorter reception and waiting times ➢ Faster entry of customer information ➢ Links with member apps ➢ Internet purchases of store merchandise ➢ Online search of store merchandise ➢ Store pick-up of online purchases ➢ Push notifications about sales, loyalty program point expirations and other items ➢ Loyalty program with rewards upgraded according to store visit frequency ➢ Distribution of discount coupons ➢ Loyalty point management ➢ Searches for locating the nearest BOOKOFF store

Maximize customer lifetime value (LTV)

Easier sales of reuse items – “Reuse” for more enjoyable and fulfilling lives

37

Realize full potential of real stores

▼

Make EC easier for customers

▼

Improve customer convenience A link to BOOKOFF stores nationwide

A network of 800 stores

Home delivery Pick-up at stores Inventory check Payment at stores

Use All Group Strengths to Compete and Win –Use EC for an Omni-channel Structure – The O2O Strategy

Combine e-commerce channels and the nationwide store network to use the best methods for giving all customers the valuable opportunity to buy reuse merchandise

38

Use All Group Strengths to Compete and Win

–The “One BOOKOFF” Roadmap FY3/2021 FY3/2020 FY3/2019

• Release official apps
• Coupon functions (overall)
• CRM trials
• Points received for downloads
• Functions to issue coupons at

stores

E-commerce/store loyalty point link, loyalty program and other measures Start a multi-store business model

• Sell software in store

inventories

• Links with inventories of

franchised stores

• Merchandise pick-up at stores
• E-commerce link with member

apps

• Sell books in store inventories

Use coordination with membership services for higher efficiency and better services Sell other merchandise, other measures

Create Advance Grow

Membership E-purchasing E-commerce

39

Mainly affluent and wealthy customers Enlarge the department store network Create new services

Consistent growth of earnings

HUGALL has accomplished the goal of profitability. The next step is advancing to a new phase of growth.

Use All Group Strengths to Compete and Win

–Growth of HUGALL

40

Malaysia

• BOOKOFF store operations in the U.S. (direct) and France (franchised)
• As in Japan, stores buy used books and software from local customers;

some stores focus on hobby goods, too.

• Successful operations due to merchandise lineups that match needs of

local customers and store operation/personnel training and development expertise acquired in Japan

9 stores 2 stores

• Jalan Jalan Japan, an original retail package, started operating in

Malaysia in 2016.

• Unsold reuse merchandise in Japan is sent to these stores.
• Existence of this outlet for unsold merchandise increases the flexibility
• f reuse item purchasing in Japan.
• Stores are performing well because the “preloved in Japan” concept,

large selections and low prices match the needs of customers in

• Malaysia. Plan to open more stores while developing a well-trained

workforce in Malaysia.

Expanding to a 10- store network

Use All Group Strengths to Compete and Win

–Strategy for Overseas Growth

41

Substantial Expenditures for New Stores and IT

Planning a 4-year investment of ¥10 billion

Investment category

Annual budget

New stores/locations

Mainly BOOKOFF SUPER BAZAAR stores and one-stop purchasing consultation desks

¥1.0 billion Renovations

Renovations and improvements at exsiting stores, logistics operation upgrades, etc.

¥0.6 to ¥0.8 billion IT System

“One BOOKOFF” IT system, price database upgrades, next-generation business operations system, replace hardware, etc.

¥1.0 billion Total ¥2.6 to ¥2.8 billion FY3/2020 to FY3/2023

4 years

×

42

Numerical Targets

FY3/2018 Results FY3/2019 Results FY3/2020 Results

Ordinary profit ¥1.09 billion ¥2.12 billion ¥1.89 billion ROA

(Ratio of ordinary profit to total assets)

2.2% 4.8% 4.6% Interest-bearing debt-to-operating cash flow multiple 9.2 6.4 5.1 FY3/2023 Targets

¥3.0 billion

At least 6.5％ Maximum of 5.0

Based on the business policies of “upgrade individual stores” and “use all group strengths to compete and win” strategic themes, create our vision during the first two years and then produce results during the final two years. While maintaining a suitable level of financial leverage, improve the ROE by using capital efficiently.

43

Medium-term Action Plan –Two-year Progress Report

◆ Upgrade individual stores

Goals Progress Assessment Continue to create stores that match local markets Renovations of directly operated existing BOOKOFF stores Directly operated existing store sales Up2.3% from

FY3/2019

FY3/2019

69 stores

FY3/2020

97 stores

Resume

• pening stores

rapidly BOOKOFF SUPER BAZAAR

Slow new store sales due mainly to below-plan apparel sales

FY3/2019

1 store

FY3/2020

5 stores

BOOKOFF One-stop purchasing consultation desk

No significant contribution to store earnings because purchase amount has been below expectations

FY3/2019

7 stores

FY3/2020

3 stores

44

Medium-term Action Plan –Two-year Progress Report

◆Use all group strengths to compete and win

Goals Progress Assessment Pursuing the concept of “One BOOKOFF”

Smartphone app members

1.55 million

Existing directly operated store customers

down 2.3% from FY3/2019

5 to 6 million app members are needed to increase the number of customers at stores

Linking BOOKOFF Online and store inventories Started a store pick-up service for internet purchases

E-Commerce sales

¥11.2 billion

(Up 10% YoY)

Expansion of the e-purchasing system Started a smartphone pick-up service Activities are on schedule, advancing to the expansion phase

Growth of HUGALL

HUGALL became profitable in FY3/2020 Expect higher earnings due to the establishment of a low-cost structure

Overseas growth

Malaysia Opened 5 stores Jalan Jalan Japan brand awareness increasing; plan to continue opening many stores

45

Our Commitment to the Sustainable Development Goals

Reuse and paper recycling Creation of jobs and supply of quality products and apparel Jewelry repair service for a longer life of jewelry 特例子会社 ビーアシスト Assistance and jobs for people with disabilities Partnerships with companies, governments and NPOs BOOKOFF’s business operations contribute to society by using the purchase and sale of items to extend the life of these products, thereby reducing the volume of items that are discarded. Therefore, BOOKOFF is playing an important role in achieving the 12th SDG: responsible consumption and production. We will continue to use our core reuse business and other activities to contribute to the accomplishment of the SDGs.

B-Assist, Inc.

Kimochi-to

46

Change of Fiscal Year End to May 31

Dec. Jan. Feb. Mar. Apr. May Jun.

Major events Settlement

• f accounts

New Year sales events

Peak buying season Peak buying season 3Q balance sheet inventory 4Q balance sheet inventory Establishment of next year’s business plan

Until now

Golden Week sales events Dec. Jan. Feb. Mar. Apr. May Jun. New Year sales events Peak buying season Peak buying season Establishment of next year’s business plan Golden Week sales events

Now

Lower store productivity because peak buying and ends

• f quarters happen at the same

time ✓ Shifting the fiscal year end to May 31 (with the approval of shareholders) will move the ends of the 3Q and 4Q away from the January and March peak buying periods. This is expected to result in the largest possible volume of purchases as well as higher efficiency. ✓ If shareholders approve this change, we plan to have a 14-month transitional fiscal period that goes from April 1, 2020 to May 31, 2021

3Q balance sheet inventory 4Q balance sheet inventory

Major events Settlement

• f accounts

Impact of the COVID-19 Crisis

48

Effects of COVID-19 on the BOOKOFF Group

Business Current status Effect

BOOKOFF in Japan

(about 80% of consolidated sales) Directly

• perated

stores

Up to about 250 stores closed on weekends/holidays or completely and started resuming operations in the middle of May

Significant impact

See the next page Franchised stores

Only a few stores temporarily closed because most locations are small stores in areas other than major metro areas

Small impact on royalty income

BOOKOFF Online

Orders increased due to the rising EC demand EC website sales increased

18%* in April-May 2020

HUGALL JAM

All locations were temporarily closed due to retail facility closings but operations are restarting

Suspensions of operations will have an effect on sales and earnings

Overseas Stores

Malaysia and US stores temporarily closed but are now restarting operations

*Prior-year comparison of the sum of EC center sales and directly operated store inventory sales using BOOKOFF Online

49

Effects of COVID-19 on BOOKOFF in Japan

YoY change in sales of directly

• perated existing stores that did

not close temporarily

April 2020 Up 10.7% May 2020 Up 3.9%

Sales were strong at stores that remained open

YoY change in sales at temporarily closed stores

after reopening

(initially reopened with reduced sales areas and operating hours)

Down 0.7%

(YoY change for May 18-31 sales)

Performance after reopening was immediately about the same as one year earlier even with shorter operating hours

YoY change in sales of directly

• perated existing stores (including

temporarily closed stores)

April 2020 Down 35.6% May 2020 Down 31.6%

A big downturn on sales at directly operated existing stores

50

COVID-19 Safety Measures at Stores

Stores are reopening in stages beginning in June 2020 while implementing numerous safety measures

Sanitizing stations Face masks Protection barriers Gloves

For customers

Always wear a face mask

Stores may not buy or sell some products No standing in aisles to read publications Proper distancing in the check-out line

Stores may temporarily close or limit the number of customers at one time To our customers: Thank you for your cooperation for avoiding crowding and close contact to prevent the spread of COVID-19.

Examples of COVID-19 countermeasures at stores

Infection countermeasures at stores are as follows.

A customer who is a nuisance to others may not be allowed to enter the store

51

Actions to Prepare for Long-term Effects of COVID-19

➢ We have increased our credit line with financial institutions and there are no concerns about liquidity for the time being ➢ We are considering revisions to parts of the business and investment plans in our medium-term business policies

52

Actions to Prepare for Long-term Effects of COVID-19

Goals Actions COVID-19 responses Upgrade individual stores

Continue to create stores that match local markets Renovations at existing stores Reexamining the store

• pening strategy and the

locations, size and other characteristics of new stores Resume opening stores rapidly BOOKOFF SUPER BAZAAR Plan to open 4 to 5 stores every year BOOKOFF One-stop Purchasing Consultation Desk Increase from 16 to 50 locations

Use all the BOOKOFF Group’s strengths

Pursuing the concept of “One BOOKOFF” Membership More emphasis on activities to meet growing needs involving EC and contact-free transactions and services E-commerce Use of IT for purchasing activities Growth of HUGALL Consistent growth of earnings No change in current goals as activities continue for returning to normal

• perations as soon as possible

Overseas growth Expand store network in Malaysia

53

FY5/2021 Forecast

Determining a reliable forecast for the fiscal year ending in May 2021, which will be the new fiscal year end if approved by shareholders, is not possible at this time because of uncertainty about many factors that affect sales and earnings. A forecast will be announced promptly once this becomes possible.

54

Shareholder Returns (Dividend Forecast)

The BOOKOFF GROUP HOLDINGS considers the distribution of profits to be one of its highest management priorities. The basic policy is to aim for higher dividends supported by growth in sales and earnings while using retained earnings effectively for strengthening financial soundness and making strategic investments that will create a stronger base for future business operations. We also have a policy of paying a consistent dividend backed by earnings while using a payout ratio of about 25% of consolidated profit as the guideline. Profitable attributable to owners of parent decreased in FY3/2020. Accordingly, we plan to pay a dividend of 6 yen per share for FY3/2020. There is no forecast for the dividend for FY5/2021, the first fiscal period after the change to the new fiscal year end, at this time because of the numerous uncertainties about the outlook for results of operations. An announcement will be made promptly

• nce it becomes possible to determine a reliable forecast.

FY3/2017 FY3/2018 FY3/2019 FY3/2020 FY5/2021 (Forecast)

Dividend per share ¥10 ¥10 ¥15 ¥6 Not determined Dividend payout ratio

• 17.7%
• 23.1%

13.4% 43.6%

55

(Contact)

Corporate Planning Department, BOOKOFF GROUP HOLDINGS LIMITED

The plans, strategies, and financial forecasts presented in these materials contain forward- looking statements not based on historical fact. Forward-looking statements are based on management judgments using information available at the time. Actual results may vary significantly from forecasts due to changes in the business environment and other factors.

Mail: irinfo@bookoff.co.jp Tel: +81-42-750-8588

Appendix

57

(Million yen) FY3/2020 FY3/2019

Net sales 84,389 80,796 Cost of sales 33,312 32,561 Gross profit 51,077 48,235 SG&A expenses 49,648 46,684 Operating profit 1,428 1,550 Non-operating income 969 1,056 Non-operating expenses 500 486 Ordinary profit 1,898 2,120 Extraordinary income 18 160 Extraordinary losses 1,015 503 Profit before income taxes 901 1,777 Income taxes-current 369 373 Income taxes-deferred 248 (791) Total income taxes 617 (418) Profit 283 2,195 Profit attributable to non-controlling interests 43 23 Profit attributable to owners of parent 240 2,172

Consolidated Statement of Income

58

(Million yen) As of Mar. 31, 2020 As of Mar. 31, 2019

Current assets 23,704 23,765 Cash and deposits 6,094 6,142 Merchandise 13,129 12,915 Others 4,480 4,706 Non-current assets 17,830 16,882 Property, plant and equipment 6,273 5,932 Intangible assets 2,003 1,204 Investments and

• ther assets

9,553 9,744 Total assets 41,535 40,647

As of Mar. 31, 2020 As of Mar. 31, 2019

Current liabilities 16,697 16,518 Short-term borrowings 9,763 9,643 Others 6,933 6,875 Non-current liabilities 11,990 11,121 Long-term borrowings 8,058 7,775 Others 3,931 3,346 Total liabilities 28,687 27,640 Net assets 12,848 13,006 Total liabilities and net assets 41,535 40,647

Consolidated Balance Sheet

59

Consolidated Statement of Cash Flows

(Million yen) FY3/2020 FY3/2019

Cash flows from operating activities 3,543 2,751 Profit before income taxes 901 1,777 Depreciation 1,581 1,570 Impairment loss 592 274 Amortization of goodwill 130 75 Changes in assets and liabilities (276) 449 Others 614 (1,394)

Cash flows from investing activities

(2,744) (559)

Cash flows from financing activities

(832) (9,895)

Effect of exchange rate change on cash and cash equivalents

(13) (14)

Net increase (decrease) in cash and cash equivalents

(47) (7,717)

Cash and cash equivalents at beginning of period

6,142 13,860

Cash and cash equivalents at end of period

6,094 6,142

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About BOOKOFF

■ Founded

May 1990

■ Established

October 2018 (A pure holding company through a transfer of stock)

■ Representative

Yasutaka Horiuchi, President and CEO

■ Stock listing

First Section, Tokyo Stock Exchange (Securities code: 9278)

■ Trading Unit

100 shares

■ Head office

2-14-20 Kobuchi, Minami-ku, Sagamihara, Kanagawa

■ Net sales

¥84.3 billion (FY3/2020 Consolidated results)

■ Number of stores

801 (Directly operated: 404; Franchised: 397 as of March 31, 2020)

■ Employees

(Consolidated) 1,403 (as of March 31, 2020)

61

History

1990

The first BOOKOFF store opened in Sagamihara, Kanagawa

1991

BOOKOFF CORPORATION LIMITED established BOOKOFF Franchise chain launched

2000

BOOKOFF’s first overseas store opened The first Chuko-Gekijo (comprehensive, large-format) opened (current BOOKOFF SUPER BAZAAR）

2004

BOOKOFF CORPORATION’s stock listed on the Second Section of the Tokyo Stock Exchange

2005

BOOKOFF CORPORATION’s stock listed on the First Section of the Tokyo Stock Exchange

2007

BOOKOFF Online (e-commerce site) launched

2015

HUGALL department store purchasing desks service started at the Nihombashi Mitsukoshi department store

2016

Made Booklog, Inc., which operates book review community site, a subsidiary

2018

BOOKOFF GROUP HOLDINGS LIMITED, a pure holding company, established

62

BOOKOFF’s Corporate Philosophy and Mission

Mission Corporate Philosophy Contributions to society through our business activities Pursuit of employees’ material and spiritual wellbeing

Be a source of enjoyable and enriching lives for as many people as possible

Growth of the Group Individual growth

Remain a company performing a vital social role 5 and 10 years from now

Mutually increase the pace of growth

Vision

Japan’s leading reuse company

(the reuse store network with the largest number of customers)

Be a company employees can trust and where everyone can grow while doing their jobs with self-confidence and passion

63

Store Packaging Evolution

・Founding ・“Sell us your books” ・Franchised store growth ・Faster BOOKOFF store openings ・New reuse business B KIDS, B SPORTS ・BOOKOFF Chuko-Gekijo (a comprehensive large-format store) ・Overseas expansion ・Online business starts

Overseas store The 1st BOOKOFF store Large-scale urban BOOKOFF store BOOKOFF Chuko-Gekijo Focus on suburban locations

1990 2000 2009 2015

One-stop purchasing consultation desk Start of operations in Malaysia

・More BSB and BOP store openings and store remodeling ・Large-scale urban BOOKOFF store openings

• Dept. store purchasing desk

64

Major Store Packages

• Avg. floor space

About 430m2

Merchandise

Books, CDs, DVDs, games, hobby goods, mobile phones, home appliances, etc.

Number of stores

648 in Japan and overseas

• Avg. floor space

About 3,135m2

Merchandise

“BOOKOFF” + Apparel/luxury- brand goods/household products/ sporting goods/kitchenware, etc.

Number of stores

47 in Japan

• Avg. floor space

About 990m2

Merchandise

“BOOKOFF”＋ Apparel/accessories, etc.

Number of stores

63 in Japan

• Avg. floor space

About 65m2

Merchandise

Stores specialize in purchasing apparel/luxury-brand goods/small size home appliances, etc.

Number of stores

16 in Japan

BOOKOFF BOOKOFF SUPER BAZAAR BOOKOFF PLUS BOOKOFF One-stop Purchasing Consultation Desk *Number of stores as of March 31, 2020

65

Understand “the fun of reusing” and you can enjoy life even more!

BOOKOFF is Much More Than Books

Home appliances, mobile phones Books Apparel Precious metals, watches, high-end brand items Sporting goods, musical instrument Children’s apparel, baby goods Furniture

A chance to find a new interest or hobby! Try choosing a writer you've never read before! Read the whole of a comic book series in one go! Be bold and take the challenge of wearing a new color or style you never worn before! The fun of coordinating! The fun of being able to buy without worrying about the price! You can see all the things you can't see anywhere else all gathered together here in one place! Choose brand goods for everyday use! The fun of collecting brands!

Buy furniture at reasonable prices! Reuse furniture has an appeal new products cannot offer

You can buy furniture at affordable prices and select items with a texture and seasoned appearance that brand new furniture cannot match. Go on, this is your chance to pursue nostalgic sports or to grab a musical instrument you've always wanted! The surfing and golf goods, the guitar you’ve wanted for so long… perhaps you can't afford it new but you can get it for reuse at a very reasonable price, and you can make a start right now without worrying if you just remember that “if I don't keep it up I can always sell it.” The blossoming of your children's talents You've seen snowboarding, tennis, and golf genius boys and girls on TV, haven't you? It might be tough to buy a full set all in one go, but if it's reuse you can give your child the support to pursue the challenge of a new talent without having to worry about the cost. Baby goods - they soon grow out of them which is all the more reason to get them for reuse! Children grow so quickly, and the baby carriage you bought for them so lovingly soon falls out of use. At times like these, please buy your items reuse and carefree, and then just sell them again when you’ve finished with them. Nowadays, for home appliance items, the functionality of reuse is completely satisfactory! If you set out to buy all of your important home appliances in

• ne go, it's going to amount to a very expensive bill for you to
• pay. These days however, you can easily buy great quality

reuse products with high-level functions and excellent reliability so cheaply!

66

Other Group Businesses

HUGALL operates one-stop purchasing consultation desks at major department stores. These conveniently located desks allow people visiting stores for shopping to stop by to receive a variety of information and services concerning the sale of reuse items. The Aoyama Book Center is a store selling new books that is located in the Omotesando district of Tokyo.

Aoyama Book Center

More than one million people use this book review community website.

HUGALL Booklog

BOOKOFF Online allows customers to use the internet for the convenience of buying or selling books, comics, DVDs, CDs, games and many other reuse items without leaving

• home. This business, which started in 2007, has served

number of customers and is now Japan’s largest reuse product website.

BOOKOFF Online

67

BOOKOFF’s Employee Training and Development

Employee training and development programs to maintain a skilled workforce for store operations

Employee training and development curriculum using manuals and based on the corporate philosophy and other principles and guidelines Cheerful, polite and speedy service Career advancement program for all employees Trainee Challenger C Challenger B Challenger A Trainer Manager Assistant manager

Career advancement

Independent work following instructions Required skills Independent work without instructions A model for

• ther

employees Qualified as a trainer Store and

• ther

management knowledge Store and

• ther

management capability

68

A database for reuse merchandise purchasing prices Assessments using web cameras The BOOKOFF pledge to comply with laws and regulations

Purchasing services that uses the customers’ standpoint and strict compliance with laws and regulations A resolute commitment to operate stores where customers can sell reuse merchandise with complete confidence

At-home purchasing service

Head office Stores

Services Customers Can Use with Confidence

69

BOOKOFF’s Own E-Commerce Channel

About 2.5 million shipments every year Japan’s largest inventory of used books

Home pick-up service for purchases of books and software E-commerce sales

BOOKOFF Online allows customers to buy and sell reuse products without leaving home

Takuhonbin

70

Sports Sponsorship Agreements

BOOKOFF backs the SC Sagamihara and Nojima Stella Kanagawa Sagamihara professional soccer teams. BOOKOFF is a sponsor of professional snowboarder Hiroaki Kunitake.

BOOKOFF uses sports sponsorship agreements to increase purchases and sales of high- quality, inexpensive reuse sporting goods as well as support individuals, teams and

• events. Sponsorships also help increase the number of people participating in sports

and competing in tournaments.

BOOKOFF OKINAWA is an official sponsor of the Ryukyu Golden Kings basketball team of Japan’s B.League. BOOKOFF sponsors surfer Kana Nakashio, designated for skill development by the Nippon Surfing Association.

71

Activities for Diversity –Creating a Pleasant Workplace Environment

Job site selection Coordinated husband- wife transfers Re-hiring system Refreshment time off Pregnancy and child care leave Child care leave Reduced working hours Nursing care time off Job site selection for elderly parent care Elderly parent care short

• r extended time off

Since October 2014, employees have had the option of requesting a job in a particular region of Japan. At first, employees could select the Tokyo area (Tokyo, Kanagawa, Chiba and Saitama), Chukyo area or Keihanshin area (Kyoto, Osaka and Hyogo). Now, this program has been expanded to include other major cities and regions. In the past, married couples working at the BOOKOFF Group were unable to live together at times due to a transfer of

• ne person. To end this problem, the

Group has established a program that allows the other spouse to be relocated to a store near the husband or wife who was initially transferred.

Employees are the BOOKOFF Group’s most valuable asset. Developing “human assets” with intelligence and solid character will contribute directly to the Group’s growth. We are dedicated to maintaining workplace environments where all employees, regardless of gender, can fully utilize their skills. This includes a commitment to providing opportunities for people to upgrade their skills and accomplish their goals.

72

Activities for Diversity –Employing Persons with Disabilities

B-Assist, Inc.

The BOOKOFF Group is dedicated to providing jobs for people with disabilities. For these people with a desire and ability to work, we provide real employment

• pportunities, and the necessary workplace environment, rather than simply

so-called welfare positions. We want these people to be active and self-reliant members of society. To provide these jobs, we established B-Assist in October

• 2010. The company was designed as a special subsidiary based on the Act on

Employment Promotion etc. of Persons with Disabilities in the following

• December. At the end of March 2020, BOOKOFF Group employed 144 people

(3.44% of the entire workforce) who have disabilities.

BOOKOFF was recognized by the Japan Organization for Employment of the Elderly, Persons with Disabilities and Job Seekers as an outstanding company for the creation of jobs for people with disabilities.

Omiya Office (established in Sep. 2015) Higashi Chiba Office (established in Apr. 2014) Kawasaki Office (established in Apr. 2013)

Offices

Machida Office (established in Feb. 2013) Seya Office (established in Oct. 2011) Main activities

• Processing BOOKOFF Group

merchandise, store maintenance, merchandise stocking and sales, production of point-of-purchase marketing materials

• Picking, shipments, and data erasure

for mobile phones, tablets and other devices at distribution centers

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Kimochi-to –An Innovative Crowdfunding Scheme from BOOKOFF

Kimochi-to is a crowdfunding platform operated by BOOKOFF that allows people to sell used books and other reuse items and direct the proceeds to be donated to a charity of other worthy cause.

What is Kimochi-to?

How Kimochi-to works 詳細は

キモチと。

Select a charitable program to support BOOKOFF collects reuse items for sale at no charge Sales proceeds go to the designated worthy cause

Item = Cash = Donation

Receive an appreciation gift (in some cases)

For more information Kimochi-to

Search