*The share price is the closing price on May 24. The number of shares issued was obtained by subtracting the number of treasury shares from the number of outstanding shares as of the end of the latest quarter.

 

*The forecasted values were provided by the company. From FY3/16, net income is profit attributable to owners of the parent. Hereinafter the same shall apply.
*Allocation of 3,100,000 shares to third parties in May 2014.

We present this Bridge Report reviewing the Fiscal Year March 2018 earnings results and Fiscal Year March 2019 Earnings Estimates about BOOKOFF CORPORATION LIMITED.

 

 

 

 

With the motto, "A company with an infrastructure for people who refuse to discard items that can be reused," the company has expanded its reuse business into various genres, including books, CDs, DVDs, games, apparel, sporting goods, baby goods and miscellaneous goods. It has its own store network covering more than 800 (directly managed + franchised) stores all over the country. Under a capital and business tie-up with Yahoo Japan Corporation, they pursue synergies between "reuse at physical stores" and "reuse at online stores." The BOOKOFF group is composed of BOOKOFF CORPORATION LTD., and 13 consolidated subsidiaries, including BOOKOFF Online, Inc., which operates an E-commerce site "BOOKOFF Online;" Booklet Inc., which runs Reuse Store business in Osaka, Hyogo and Nara; and BOOK OFF U.S.A. INC., which operates Reuse Store business in the United States. Yahoo Japan Corporation (4689) is the largest shareholder and owns 13.73% of the company's issued shares. Business Description Its business includes Reuse Store business, BOOKOFF Online business for operating an E-commerce site "BOOKOFF Online," HUGALL business, which does not limit itself to a store-based business and handles a wide variety of commodities (these businesses are segments to be reported), as well as the operation of bookstores handling new books, "Aoyama Book Center," "Ryusui Shobou" and "yc-vox," and the others that conduct planning, design, and construction of interior and exterior finish work for stores of each business. Reuse Store Business As the chain headquarters of the reuse store "BOOKOFF" for books, software, etc., they operate the franchise (FC) system and directly managed stores. There are three types of directly managed stores, "BOOKOFF," "BOOKOFF PLUS" and "BOOKOFF SUPER BAZAAR." "BOOKOFF PLUS" is a medium-sized complex store where apparel commodities are added to "BOOKOFF," whereas "BOOKOFF SUPER BAZAAR" is a large-sized complex store dealing in a wide variety of commodities, in addition to books and software, such as home appliances (audio and visual devices, computers, etc.), apparel, sporting goods, baby goods, watches, brand bags, jewelry, tableware and miscellaneous goods. As for main subsidiaries, BOOKOFF-With Inc., Booklet Co. Ltd., Reuseconnect Inc. and BOOKOFF Okinawa Inc. manage "BOOKOFF" stores in Japan. BOOKOFF-With Inc. manages reuse stores for apparel, baby goods and others, in addition to the goods mentioned above. It is also a franchisee of a reuse chain store, "Kingram," which handles watches, brand bags and jewelry. In addition, Booklet Co., Ltd. and BOOKOFF Okinawa Inc. manage reuse stores for apparel, etc. As for overseas business operation, BOOKOFF U.S.A. INC. runs "BOOKOFF" stores in the United States, and SCI BOC FRANCE leases real estate owned in France. CSR Activities The company implemented "Sell-and-Support Program," in which part of the purchase amount will be donated to devastated areas, when customers use "Takuhonbin," a home-visiting service for buying used books, CDs, DVDs, game software, etc. (The BOOKOFF Group donates 10% of the purchase amount to the Japanese Red Cross Society.)

 

 

Sales declined 1.6% year on year, but ordinary income rose 85.6% year on year. Sales decreased 1.6% year on year to 80,049 million yen. For all segments to be reported, sales dropped, but the decrease rate of sales from Reuse Store business, which is its mainstay, was as low as 0.8%, thanks to the effects of opening of new stores, the increase of consolidated subsidiaries, etc. Accordingly, the decline in consolidated sales was curbed. Operating income grew 5.3 times to 613 million yen. The stocks of "Tokyo Furugi," the business of selling products at events, were disposed of when the company withdrew from this business, the loss from HUGALL business augmented due to the increase in cost after the relocation to a large-scale distribution warehouse in the previous term, and the profit from BOOKOFF Online business declined due to the drop in sales, but the profit from the Reuse Store business grew 31.0% year on year, due to the cost reduction started in the 3rd quarter of the previous term. As operating income grew, ordinary income increased 85.6% year on year to 1,092 million yen, but there was a net loss (attributable to owners of parent) of 889 million yen, because the company posted an extraordinary loss of 1,250 million yen and a corporate tax of 783 million yen. Although consolidated net loss before taxes and other adjustments was posted due to the huge loss from hugall Inc., the company and its other consolidated subsidiaries posted profit in their non-consolidated financial statements, which explains the payment of such corporate taxes. While operating and ordinary incomes exceeded their initial estimates, there was a net loss of 889 million yen, significantly below the initial estimate. This is because the company liquidated hugall Inc. and booked the impairment loss from combined reuse stores in the second half, while considering the results in the first half. The term-end dividend remained at 10 yen/share. As for sales, the sales at existing stores declined, but it was covered by the opening of three directly managed "BOOKOFF SUPER BAZAAR" stores and the reorganization of BOOKOFF With Inc., etc. into consolidated subsidiaries. As for profit, gross profit rate increased 0.6 points to 60.6%, thanks to the revision to sales measures and inventory criteria, while SG&A declined 1.8% year on year (SG&A rate improved 0.5 points), due to the reduction of personnel expenses through the streamlining of store operation (thoroughgoing low-cost operation), comprehensive cost reduction through the efforts at each store, the decline in depreciation through the curbing of large-scale investment, and the increase in ad cost and expenditure for supplies through the introduction of home appliances, etc. in the previous term. Equipment investment decreased by half from 2,264 million yen in the previous term to 1,121 million yen, due to the restraint on the opening of new stores. The company continued small-scale investments, such as the establishment of comprehensive purchase counters, and the installation of IT for streamlining business operation. Newly opened directly managed stores (All of them made a good start, and their profit/loss in the initial year was almost as planned.) BOOKOFF SUPER BAZAAR Seiyu-Ohmori Store May. 18 Shinagawa-ku, Tokyo 532 tsubo (1,758 m²) BOOKOFF SUPER BAZAAR Northport Mall Store Jun. 22 Yokohama-shi, Kanagawa Pref. 896 tsubo (2,961 m²) BOOKOFF SUPER BAZAAR Aeon Sendai Store Jun. 29 Sendai-shi, Miyagi Pref. 511 tsubo (1,689 m²) *1 tsubo = 3.3 m² As of the end of the term, the company had 386 directly managed stores (388 stores at the end of the previous term), and 439 FC stores (455 stores at the end of the previous term). Among them, the new ones were 3 directly managed "BOOKOFF SUPER BAZAAR" stores (6 stores in the previous term) and 2 FC "BOOKOFF" stores. The company established 5 comprehensive purchase counters (1 counter in the previous term). In addition, the company reorganized 2 directly managed stores (6 stores in the previous term) and 2 FC stores of "BOOKOFF" into "BOOKOFF PLUS," dealing in apparel, etc. The company acquired 9 "BOOKOFF" stores from franchisees, to directly manage them. In September, the company opened the second reuse store "Jalan Jalan Japan" in Malaysia. On the other hand, 12 stores were closed. In the term ending March 2019, too, some stores are to be closed. Accordingly, in extraordinary loss, the company posted a loss from the closing of stores, etc. amounting to 124 million yen and a provision for allowance for said loss amounting to 124 million yen. The sales from existing stores declined 3.5% year on year (100.2% in the previous term), as the company implemented sales promotion and bargain measures after dealing in used home appliances in the previous term. However, thanks to the effects of "Kaumaenique," which will be described later, the sales in March were larger than those in the same month of the previous year, and the sales in April 2018 were 100.1% of those in the same month of the previous year. Core products, including trading cards, hobby goods, jewelry, watches, and brand bags, sold well, but the company faced difficulty in procuring them. As a result, the sales of 3 top products (books, soft media, and apparel), home appliances, and mobile phones declined (total procurement amount declined 2.4% year on year). As for home appliances and mobile phones, the procurement amount of mobile phones dropped considerably due to the trade-in by carriers. On the other hand, the procurement of soft media was healthy in the second half, due to the effects of the new purchase service "Kaumaenique." The new purchase service "Kaumaenique" (to buy used goods at stores and by parcel delivery service) pays money to users by wire transfer, in cash, or T-points. In the case of T-points, promotional T-points (having an expiration date and can be used at limited places) will be added to the appraised value. BOOKOFF Online Business Sales were 6,140 million yen, down 5.9% year on year, and operating income was 232 million yen, down 43.8% year on year. Sales dropped, because the company stopped shipping stocks from stores for securing inventory at stores and inventory declined as the amount of purchase of used goods at customers' houses was sluggish. As for profit, the company suffered some burdens due to the campaign for buying used goods at higher prices for securing inventory, in addition to the decline in sales. HUGALL Business Sales were 2,071 million yen, down 7.7% year on year, and operating loss was 897 million yen (680 million yen in the previous term). While sales declined as the company discontinued "Tokyo Furugi," the business of selling products at events, inventory depreciation augmented due to the discontinuance and rents increased after the relocation to a large-scale distribution warehouse. On Mar. 21, BOOKOFF Online Inc. absorbed hugall Inc., incorporating HUGALL business into BOOKOFF Online business (the HUGALL segment was deleted in the term ended Mar. 2018). Term-end total assets were 47,888 million yen, down 3,158 million yen from the end of the previous term, due to the posting of impairment loss, the reduction in interest-bearing liabilities, etc. Equity ratio was 27.5% (27.9% at the end of the previous term). Free CF improved from negative 88 million yen in the previous term to positive 1,727 million yen, as working capital decreased and the opening of new stores was curbed. Financing CF was negative 3,394 million yen, due to the repayment of debts. (4) Summary of the term ended Mar. 2018 Recognizing the term ended Mar. 2018 as the year for stabilizing revenue as soon as possible to achieve growth from the next term, the company engaged in the drastic reform of HUGALL business and the enhancement of the earning capability of Reuse Store business. The company also opened the second store in Malaysia business, which is recognized as the exit strategy of the corporate group. Drastic reform of HUGALL business While sorting out purchase channels, the company downsized and rationalized distribution centers. In addition, the company cleared out low-price inventory. When sorting out purchase channels, the company closed or downsized all channels, excluding purchase counters at department stores, which have great potential. When downsizing and rationalizing distribution centers, the company incorporated major functions into the distribution centers of BOOKOFF Online business in Yokohama-shi, Kanagawa Prefecture, and downsized and subleased the existing center in Funabashi-shi, Chiba Prefecture while keeping minimum functions (subleasing 5,000 tsubo (16,529 m²) out of 6,000 tsubo (19,835 m²), and using 1,000 tsubo (3,306 m²) by itself). When clearing out low-price inventory, the company withdrew from "Tokyo Furugi," the business of selling products at events, and disposed of the remaining inventory through depreciation. As mentioned above, BOOKOFF Online Inc. absorbed hugall Inc. in March. Although cost will augment for shipping, human resources, etc., the company will strive to streamline the operation of purchase counters at department stores and make it profitable as soon as possible. Enhancement of the earning capability of Reuse Store business The company worked on an improvement of gross profit rate along with a reduction of SG&A expenses, limited the opening of new stores and upgraded existing stores. As a result, operating income recovered to the level in the term ended Mar. 2015, and the sales at existing stores in March exceeded those in the same month of the previous year. Since the market of comic books is shrinking, the company will take continuous measures for existing stores. In detail, the company will reform selling spaces, dealing in new products. In the term ended Mar. 2018, all of the directly managed stores produced a written policy for store operation for the coming two or three years. Under the marketing structure in each region, the company will reform selling spaces, introducing products according to the characteristics of stores and regions, based on the policy. For enhancing the earning capability, the company started closing underperforming stores. To determine whether to close a store, the company checked (1) its revenue state and recoverability, (2) geographical factors of the store opening strategy, (3) economic rationality in lease contracts (penalty of cancellation), etc. In the term ended Mar. 2018, the company closed 12 stores. In the term ending Mar. 2019, several stores are to be closed. In the section of extraordinary loss for the term ended Mar. 2018, the company posted a loss from the closing of stores, etc. and a provision for allowance for said loss amounting to 124 million yen. The company will keep closing underperforming stores swiftly, to improve the profitability of the business. Malaysia business As the exit strategy of the corporate group, the company opened the first store of the "Jalan Jalan Japan" brand in Nov. 2016, and the second store in Sep. 2017. The performance of these two stores is healthy, and so the company plans to open the third store in Jun. 2018. In order to develop these stores as the destinations of unsold stocks in Japan, the company aims to expand the store network and popularize the "Jalan Jalan Japan" brand in Malaysia.

 

 

Current situation of the reuse market, and characteristics and strengths of the company's business According to the correspondence about recycling "Used Product Market Databook 2018" (referred to the data below as well), the scale of the domestic reuse market in 2016 was 1,774.3 billion yen. It expanded for 7 consecutive years from 2009 to 2016, and is estimated to reach 1,950 billion yen in 2020, and 2,050 billion yen in 2025. The competition in the reuse market is getting fierce, and the growth driver is changed from bricks-and-mortar to online BtoC and CtoC ones. In the promising domestic reuse market, books have the largest number of purchasers, which was 24.4 million in 2017. This is followed by 20.89 million customers who bought clothes and accessories, 14.05 million customers who bought game software and media, and 10.55 million customers who purchased daily necessities and sundry goods. "Books," which are purchased by a broad range of customers, are competitive, and the company boasts a lion's share of 55.8% in the reuse market for books. The company's store network covers over 800 stores, the cumulative total number of store users is about 90 million, and the number of card members is about 17 million. As for online business, the number of EC members is about 3.6 million, and the company boasts the largest number of used books in stock in Japan. It is no exaggeration to say that the company is "the most used reuse chain in Japan." Under the mid-term management policy, which will be described later, the company plans to recover revenue and return to a growth track. Mid-term management policy Corporate ethosContribution to society and pursuit of mental and physical happiness of all employees through business activities MissionProvision of enjoyable, affluent life to many people VisionLeading company in the reuse market (the most used chain) With the mission to "offer enjoyable, affluent life to many people," the company aims to make the life of many people more enjoyable and affluent through the reuse of various goods as a leading company, with a particular emphasis on the reuse of books, and attain its corporate ethos, as each employee will grow through business activities and the company will grow sustainably. In order to attain the corporate ethos, the company set the two business policies: "to polish individual stores" and "to make all-out efforts." In order to "polish individual stores," it is essential to (1) maintain or improve the revenue from small and medium-sized stores, (2) increase the procurement capability of small and medium-sized stores, (3) open combined stores, and enhance their earning capability, and (4) grow online services. In order to "make all-out efforts," it is important to (1) unify stores into BOOKOFF, (2) integrate member bases and enrich membership services, (3) improve services of buying used goods, (4) enrich sales services, (5) develop platforms for buying and selling used items, and (6) conduct collaborative business with Yahoo Japan. To polish individual stores (1) To maintain or improve the revenue from small and medium-sized stores The company aims to maintain or increase the revenue from small and medium-sized stores, by upgrading existing products (books and software) and adding new products. The company will put together the know-how for handling existing products (books and software), which are important contact points with customers, in regional marketing divisions and stores, and share it with all stores as the latest results and examples to utilize it. As for added products, the company will develop and add menus, choose and adopt them according to the situation of each region. The company will make efforts to reduce the burden of adopting a menu by enriching electronic purchase systems and databases. Through these efforts, the company will increase the sales composition ratio of products other than books and software. (2) To increase the procurement capability of small and medium-sized stores For enhancing the procurement capability, the company will upgrade comprehensive purchase counters, at which professional appraisers attend to customers, appraise used goods, and buy a variety of items, not limited to books and software. A merit of comprehensive purchase counters is that it is possible to buy and procure good-quality items in urban areas at a low cost. The formats for opening them can be classified into the stand-alone format, in which a small store specializing in purchase is opened at a location where good-quality items could be purchased, and the installation format, in which a purchase counter is set inside an existing BOOKOFF store. At present, 7 counters are in operation in Tokyo. The company plans to increase the number of purchase counters by 5 to 10 every year, while checking sales efficiency and the level of contribution to revenue. (3) To open combined stores (BOOKOFF SUPER BAZAAR and BOOKOFF PLUS), and enhance their earning capability Considering the characteristics of the respective packages of "BOOKOFF SUPER BAZAAR" and "BOOKOFF PLUS," the company will pursue "integrated performance" and "expertise" and improve "profitability," and keep opening 3 or 4 new stores per year after rigorously selecting target areas. As for "BOOKOFF SUPER BAZAAR," the company will improve the expertise of high-priced products with the knowledge of products, advanced skills to attend to customers, etc., and enhance the productivity of low-priced products by training staff, revising the counter layout, and so on. As for "BOOKOFF PLUS," the company aims to boost revenue per square meter, by producing selling spaces according to locational characteristics, adding products, such as sports gear and miscellaneous goods, according to the capacity of selling spaces, selecting and promoting some of existing products, and so on. In addition, the company will hire experienced workers, and strive to improve product competitiveness. (4) To grow online services (BOOKOFF Online and hugall) By promoting the integration of human resources and products in "BOOKOFF Online" and "hugall," the company will approach new customers that cannot be reached by actual stores. As for "BOOKOFF Online," the company will enrich the lineup of "popular products" and "longtime sellers," and aim to become the "only one" category killer in each genre. In addition, while keeping the current number of items, the company will handpick some products from an excessive amount of stocks and boost turnover ratio. As for "hugall," the company aims to seize new opportunities for growth by making services including purchase counters at department stores profitable as soon as possible and securing good-quality products other than books and software. By boosting the procurement amount through the synergy between "BOOKOFF Online" and "hugall," the company aims to achieve sales of 10 billion yen. The company will also pursue efficient operation by integrating distribution centers and cement cooperation with stores. To make all-out efforts (1) To unify stores into BOOKOFF The number of "BOOKOFF" stores exceeds 800, the cumulative total number of users of BOOKOFF is about 90 million, the number of card members is about 17 million, the number of EC members of "BOOKOFF Online" is about 3.6 million, the inventory of used books is one of the largest in Japan, the purchase counters of "hugall" are in operation at major department stores, the company offers services for wealthy people, the number of Booklog members is 1 million, and there are 8 million reviews. These are tangible and intangible assets of the company, but they have not exerted synergy. From now on, the company will utilize the above-mentioned assets as "unified BOOKOFF," while focusing on membership services. (2) To integrate member bases and enrich membership services The company planned to integrate and link member IDs which used to be unorganized in the group. Firstly, the company planned to integrate about 17 million card members and about 3.6 million EC members of BOOKOFF Online, enriching membership services. The integration has been already completed, and in Jun. 2018, the company will release new apps, promote sales by utilizing points, strengthen connections with loyal customers, enrich new additional services, and so on. (3) To improve services of buying used goods, and (4) to enrich sales services The company will make efforts to improve purchase and sale services, by developing electronic purchase systems, enriching databases, increasing purchasable items, operating comprehensive purchase counters, upgrading online application systems, using alliances of Kaumaenique, etc. In order to sell purchased products efficiently and swiftly, the company will make store information publicly available via a portal site, etc. and enlarge stores, dealing in new genres of products. In addition, the company will boost online sales. As for online sales, the company will handle more items and diversify sales channels. (5) To develop platforms for buying and selling used items The company will share stocks and information inside the corporate group, and develop platforms for buying and selling used items based on "BOOKOFF Online," to "enable customers purchase products of BOOKOFF across the country anywhere, anytime" and "understand and choose how to sell items they no longer use." (6) To conduct collaborative business with Yahoo Japan As "Kaumaenique" was started in Nov. 2017, the company realized cooperation with Yahoo Japan in buying and selling used products. Thanks to "Kaumaenique," the procurement amount at existing stores in the 4th quarter of the term ended Mar. 2018 was 111.4% of that in the same period of the previous year. Yahoo! Auctions (BOOKOFF Group "Yahoo! Auctions Store") puts over 2 million goods up at auction, and boasts annual sales of over 4 billion yen. Performance goals By the 30th term ending Mar. 2021, which will become a milestone, the company aims to achieve "an ordinary income of 2 billion yen, an ROA (return on asset) of over 5.0%, and a ratio of interest-bearing liabilities to operating CF of less than 5.0."

 

 

Sales and ordinary income are estimated to grow 0.6% and 9.8%, respectively, year on year. As the decline in sales from BOOKOFF Online business will be offset by the sales growth of the reuse store business, sales are projected to increase 0.6% year on year to 80.5 billion yen. As for profit, operating income is forecasted to grow 30.3% year on year to 800 million yen, because the operating loss from the old HUGALL business will no longer be posted. The company aims to make net income positive for the first time since the term ended Mar. 2015. For dividends, the company plans to pay a term-end dividend of 10 yen/share. Reuse Store business Sales growth will continue, due to the improvement of existing stores, the contribution of newly opened stores, the increase of stores that offer the new purchase service "Kaumaenique," etc. The company aims to further improve its revenue structure, by operating existing stores flexibly according to regional characteristics under the operational structure of the marketing section in each region, conducting thoroughgoing low-cost operation, upgrading existing stores through the improvement of gross profit per man-hour, etc. The company will keep curbing the opening of large-scale stores, open only 2 to 3 "BOOKOFF SUPER BAZAAR" stores, renew stores while establishing comprehensive purchase counters at BOOKOFF stores, invest about 200 million yen in equipment of existing stores, and close underperforming stores. In addition, the company will invest in equipment for developing the shared base of the chain following the mid-term management policy. BOOKOFF Online Business The sales of this segment are estimated to decline, due to the withdrawal from "Tokyo Furugi," the business of selling used products at events, which had been operated as HUGALL business. As for profit, the profitability of books and software is forecasted to worsen, due to the augmentation of cost caused by the rise in shipping expenses, etc., while there will be emerged expenditures for relocating and integrating distribution centers. It also takes time to make purchase counters at department stores profitable. (2) Shift to the pure holding company structure On Oct. 1, 2018, the company plans to establish "BOOKOFF GROUP HOLDINGS LIMITED," a pure holding company (100% parent company), for the purposes of securing flexibility for swift restructuring inside the corporate group, practicing group operation based on capital efficiency, expanding business utilizing the advantage of scale, and improving its corporate value.

 

 

It seems that the new service of buying used goods "Kaumaenique" made a good start. You can sell items that you no longer use to "Kaumaenique," and then purchase items you want by using T-points via Yahoo! Auctions, etc. For the reuse business, it is vital to procure (purchase) used goods. If "Kaumaenique" gets on track, its outlook will become bright. There are many other noteworthy measures, such as the increase of comprehensive purchase counters, the reform of selling spaces, the improvement of services outside stores, and measures mentioned in the above section "To make all-out efforts," but most of them take a certain amount of time. Firstly, the company hopes to achieve the target sales of 100.5% for existing stores in the term ending Mar. 2019, to indicate that their measures are progressing smoothly.

 

 

◎ Corporate Governance ReportUpdated on Jun. 26, 2017 Basic policy Our company upholds "Contributions to society through our business activities" as one of its managerial principles, and carries out business activities with the aim of becoming a social, public institution. Under this policy, we consider that it is essential to pursue higher management efficiency for law-abiding management and shareholder value improvement, and receive shareholders' judgment through highly transparent information disclosure. Our basic philosophy and policy regarding corporate governance based on the principles of the corporate governance code are disclosed under the title "Our Approach to Corporate Governance" and available in our website mentioned below. <Reasons for Non-Compliance with the Principles of the Corporate Governance Code (Excerpts)> Our company implements each basic principle of the corporate governance code. <Disclosure Based on the Principles of the Corporate Governance Code (Excerpts)> Basic principle 1 The company promptly discloses information to all shareholders in order to ensure substantial equality, secure the rights of shareholders and contribute to appropriate exercise of the rights. Regarding the rights that are also admitted to minority shareholders, the company has set up procedures according to the stock handling regulations and is making efforts to ensure that they can exercise those rights. Supplementary principle 1-2-3 The company recognizes that the general meeting of shareholders is a forum for dialogue with shareholders and hold it on a Saturday every year so that more shareholders can attend it. Principle 1-3. Basic Policy for Capital Strategy The company recognizes profit sharing as one of the most important management items. With the target of 25% of dividend payout ratio to consolidated net income, it aims to increase dividends through continuous improvements of performance. As for the internal reserve funds, it will make effective use of them for strategic investment that will lead to strengthening its financial standing and its business foundation in the future. Basic principle 2 The company recognizes that it should collaborate with stakeholders including shareholders in order to achieve sustainable growth and create corporate value in the medium to long term. It upholds "BOOKOFF will play a role as an infrastructure that helps people who refuse to discard items choose a life where they don't have to discard items," meaning, "BOOKOFF is for people who don't let things go to waste," as its business mission, and it works on achieving a recycling-oriented society through reuse of various things. Basic principle 5 In order to contribute to continuous growth and medium to long-term corporate value improvement, the company recognizes that it is important for senior executives and directors to have constructive dialogues with shareholders even outside the general meeting of shareholders and explain the management policy in an easily understood manner to obtain their understanding. For that reason, it has established the IR system centered on the director in charge of IR and established a place for regular dialogues with investors in order to deepen their understanding of the company. Principle 5-1. Constructive dialogue with shareholders The company appoints the director in charge of IR and designates the Corporate Planning Department as the department in charge of IR. For shareholders and investors, it holds financial results briefings once every 6 months, small meetings and individual interviews when necessary. In addition, it has established an IR policy and disclosed it on its website.