Consolidated Financial Results for the First Six Months of the Fiscal Year Ending March 31, 2022 [J-GAAP]
October 29, 2021
Name of listed company:
Securities code:
Representative:
Contact:

ARTNATURE INC.
Listed on: Tokyo Stock Exchange
7823
URL: https://www.artnature.co.jp/english/index.html
Yoshikata Igarashi, Chairman and President
Hiroaki Inoue, General Manager, Finance & Accounting Division
TEL: +81-3-3379-3334
Senior Corporate Officer
Scheduled date of filing the quarterly financial report:
November 12, 2021
December 1, 2021
Scheduled date of the start of dividends distribution:
Supplementary quarterly materials prepared:
None
Explanation meeting for quarterly financial results:
Yes (for institutional investors and analysts)(Figures shown are rounded down to the nearest million yen.)

1. Consolidated results for the first six months ended September 30, 2021 (April 1, 2021 – September 30, 2021)(Percentage figures show changes from the previous year.)(1) Consolidated operating results
Net sales

Operating income (loss)

Millions of yen%
Millions of yen%
Millions of yen
Six months ended
September 30, 2021
19,329
30.7
1,561
―
1,492
September 30, 2020
14,793(26.5)
(592)
―
(431)
Note: Comprehensive income:Six months ended September 30, 2021: ¥975 million (―%)
Six months ended September 30, 2020: ¥-343 million (―%)

Net income (loss)
per share
Six months ended
September 30, 2021
September 30, 2020

Net income (loss)
attributable to owners of
the parent company

Ordinary income (loss)%

Millions of yen

%

―
―

857
(446)

―
―

Diluted net income
per share
Yen

Yen

26.71
(13.78)26.43―(2) Consolidated financial position
Total assets
Net assets
Millions of yen
Millions of yen
As ofSeptember 30, 2021
45,10224,755
March 31, 2021
44,91925,255(Reference) Equity capital: As of September 30, 2021: ¥24,530 million

Shareholders’ equity ratio

Net assets per share

%

54.4
55.8
As of March 31, 2021: ¥25,066 million

763.93781.002. Dividends
First quarter-end

Second quarter-end

Dividends per share
Third quarter-end

Yen

Yen

Yen

Yen

Yen

Year ended March 31, 2021―
14.00
Year ending March 31, 2022―
14.00
Year ending March 31, 2022
(forecast)
Note: Revisions to dividend forecasts published most recently: None

―

14.00

28.00

―

14.00

28.00

Year-end

Annual

3. Consolidated financial forecast for the fiscal year ending March 31, 2022 (April 1, 2021 – March 31, 2022)(Percentage figures show changes from the previous year.)Net sales
Millions of yen

Operating income%

Millions of yen

Net income
attributable to ownersof the parent company

Ordinary income

Net income per
share

%

Millions of yen%

Millions of yen%

Yen

Full year
40,363
12.5
2,023
4.7
Note: Revisions to most recently announced results forecasts: None

2,088

4.1

1,045

24.3

32.56

Notes:(1) Significant changes to subsidiaries during the period (Transfers of specific subsidiaries with changes in the scope of consolidation): None
(2) Application of specific accounting methods for preparing the quarterly consolidated financial statements: None
(3) Changes in accounting policies, accounting estimates and restatement of revisions
1) Changes in accounting policies due to revision of accounting standards, etc.: Yes
2) Changes in accounting policies other than 1):
None3) Changes in accounting estimates:
None4) Restatement of revisions:
None
Note: More information is provided on page 9 of the supplementary materials, “2. Quarterly consolidated financial statements and related
notes, (4) Notes on quarterly consolidated financial statements (Changes in accounting policies).”(4) Number of outstanding shares (common stock):1) Number of shares issued and outstanding (including treasury shares)
As of September 30, 2021
34,393,200 shares
As of March 31, 2021
34,393,200 shares
2) Number of treasury shares
As of September 30, 2021
2,281,839 shares
As of March 31, 2021
2,297,539 shares
3) Average number of shares issued and outstanding in each period
Six months ended September 30, 2021 32,101,675 shares
Six months ended September 30, 2020 32,370,292 shares*This quarterly kessan tanshin document is outside the scope of audit procedures conducted by certified public
accountants or the independent auditor.

*

Explanation of the appropriate use of financial results forecasts; other important items(Cautionary statement regarding forward-looking statements, etc.)
Forward-looking statements in this document, including forecasts, are based on information available at the time of disclosure and on
certain assumptions deemed reasonable by the Company. Actual results may differ materially from forward-looking statements due to anumber of factors. For more information about these assumptions and other conditions that form the basis of these forecasts, please see
page 3 of the supplementary materials, “1. Analysis of operating results and financial position, (3) Qualitative information on consolidated
financial forecasts.”

ARTNATURE INC. (7823) Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2022
Contents
1. Analysis of operating results and financial position .............................................................................................................. 2(1) Analysis of operating results ................................................................................................................................................. 2(2) Analysis of financial position ............................................................................................................................................... 2(3) Qualitative information on consolidated financial forecasts ................................................................................................. 3
2. Quarterly consolidated financial statements and related notes ............................................................................................ 4(1) Quarterly consolidated balance sheets .................................................................................................................................. 4(2) Quarterly consolidated statements of income and comprehensive income .......................................................................... 6(Quarterly consolidated statements of income) .................................................................................................................... 6(Quarterly consolidated statements of comprehensive income) ........................................................................................... 7(3) Quarterly consolidated statements of cash flows .................................................................................................................. 8(4) Notes on quarterly consolidated financial statements .......................................................................................................... 9(Notes on the going concern assumption) ............................................................................................................................ 9(Notes on significant fluctuation in amounts of shareholders’ equity) ................................................................................. 9(Changes in accounting policies).......................................................................................................................................... 9–1–

ARTNATURE INC. (7823) Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2022

1. Analysis of operating results and financial position(1) Analysis of operating results
Operating results for the first six months of fiscal 2022
In the first six months of fiscal 2022 (April-September 2021), economic activities were restricted in Japan due to the impact ofthe prolonged COVID-19 pandemic, which had continued since the previous fiscal year. Although vaccination is making
progress and economic activities are expected to recover, the outlook for the Japanese economy remains uncertain.
Against this backdrop, ARTNATURE INC. and its consolidated subsidiaries (the ARTNATURE Group) saw the ARTNATURE
Challenge Plan, the three-year medium-term management plan, mark its second year. Under the plan, we have been
implementing six priority challenge initiatives, as we did in the first year: (1) grow the Group’s earnings, (2) develop new
business fields, (3) reinforce recruitment, (4) cultivate human resources, (5) encourage dialogue with capital markets, and (6)drive business innovation, with the aim of strengthening the ARNATURE Group’s position in existing businesses and further
expanding new businesses to build the foundations for a new ARTNATURE capable of opening up the next phase in theGroup’s history. At the same time, we have continued to take comprehensive measures to prevent COVID-19 infections in ourbusiness activities since the previous fiscal year.
As a result, consolidated net sales in the first six months under review increased 30.7% year on year to ¥19,329 million. In
terms of profits, operating income stood at ¥1,561 million (compared with an operating loss of ¥592 million in the first six
months of the previous fiscal year), and ordinary income came to ¥1,492 million (compared with an ordinary loss of ¥431
million in the first six months of the previous fiscal year) due to an increase in net sales. Net income attributable to owners of
the parent company was ¥857 million (compared with a net loss attributable to owners of the parent company of ¥446 million
in the first six months of the previous fiscal year).
Business results by segment are as follows.
< Men’s business >Sales in the men’s business increased 26.7% year on year, to ¥11,078 million, as a result of eliminating the significant fall insales in the first six months of the previous fiscal year that had been caused by the temporary closure of production sites in thePhilippines associated with the COVID-19 pandemic and other factors, in addition to the sale of new products and thepromotion of measures to retain customers, etc.
< Ladies’ business >Sales in the ladies’ business rose 43.4% year on year, to ¥5,683 million, as a result of eliminating the significant fall in sales in
the first six months of the previous fiscal year that had been caused by the temporary closure of production sites in thePhilippines associated with the COVID-19 pandemic and other factors, similarly to sales in men’s business, in addition to thesale of new products and the holding of exhibition and trial fitting events, among other measures.
< Ladies’ ready-made wigs business >Sales in the ladies’ ready-made wigs business increased 36.0% year on year to ¥1,802 million, despite the impact of thetemporary closure of the retail facilities in which the Company’s stores are located due to the spread of COVID-19, because
the impact was relatively limited compared with the first six months of the previous fiscal year.
(2) Analysis of financial position
1) Assets, liabilities and net assets(Assets)
As of the end of the second quarter, total assets were ¥45,102 million, an increase of ¥182 million compared with the end of
the previous fiscal year. Current assets decreased ¥427 million, mainly due to a fall in cash and deposits, while non-current
assets increased ¥610 million, primarily reflecting an increase in investments and other assets.
(Liabilities)
As of the end of the second quarter, liabilities totaled ¥20,347 million, an increase of ¥682 million compared with the end of
the previous fiscal year. Although accounts payable - other, income taxes payable and advances received decreased, current
liabilities increased ¥529 million mainly due to an increase in other current liabilities associated with the application of theaccounting standard for revenue recognition.

–2–

ARTNATURE INC. (7823) Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2022
(Net Assets)
As of the end of the second quarter, net assets were ¥24,755 million, a decrease of ¥499 million from the end of the previous
fiscal year. This largely reflected a decrease in retained earnings associated with the application of accounting standard forrevenue recognition.
2) Cash flow position
As of the end of the second quarter, cash and cash equivalents (cash) totaled ¥18,461 million, a decrease of ¥523 million
compared with the end of the previous fiscal year. The cash flow position and contributing factors in each section of thestatements of cash flows are as follows.
(Cash flows from operating activities)
Operating activities provided net cash of ¥550 million, compared with ¥206 million in the same period a year earlier. Cashinflows, including income before income taxes of ¥1,487 million, depreciation of ¥425 million, and a decrease in notes andaccounts receivable-trade of ¥387 million, more than offset cash outflows, including income taxes paid of ¥924 million, an
increase in inventories of ¥285 million, and a decrease in advances received of ¥372 million.
(Cash flows from investing activities)
Investing activities used net cash of ¥649 million, compared with ¥329 million in the same period a year earlier. That mainlyreflected purchase of property, plant and equipment of ¥388 million and payments for long-term loans receivable of ¥150
million.
(Cash flows from financing activities)
Financing activities used net cash of ¥464 million, compared with net cash provided of ¥2,547 million in the same period ayear earlier. That mainly reflected cash dividends paid of ¥449 million.
(3) Qualitative information on consolidated financial forecasts
Consolidated financial forecasts for the fiscal year ending March 31, 2022 remain the same as those announced on May 14,
2021.

–3–

ARTNATURE INC. (7823) Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2022

2. Quarterly consolidated financial statements and related notes(1) Quarterly consolidated balance sheets(Millions of yen)
As of March 31, 2021
AssetsCurrent assets
Cash and deposits
Accounts receivable – trade
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
OthersAllowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Others, net
Total property, plant and equipment
Intangible assets
Goodwill
OthersTotal intangible assets
Investments and other assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets–4–

As of September 30, 2021

19,073
2,914
22
2,394
172
1,084
930
(5)
26,586

18,554
2,531
24
2,680
186
1,094
1,091
(4)
26,159

4,755
3,919
8,674

4,889
3,917
8,806

602
519
1,121

516
458
974

8,772
(235)
8,536
18,332
44,919

9,514
(352)
9,162
18,94345,102

ARTNATURE INC. (7823) Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2022

(Millions of yen)
As of March 31, 2021
Liabilities
Current liabilities
Accounts payable – trade
Accounts payable – other
Income taxes payable
Advances received
Provision for bonuses
Provision for directors’ bonuses
Provision for product warranties
Provision for point card certificates
OthersTotal current liabilities
Non-current liabilities
Net defined benefit liability
Asset retirement obligations
OthersTotal non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets–5–

As of September 30, 2021

327
1,947
1,053
6,464
996
130
31
107
1,088
12,147

321
1,572
771
6,091
1,019
75
36
―
2,787
12,677

4,078
1,511
1,927
7,517
19,664

4,172
1,535
1,962
7,669
20,347

3,667
3,558
19,075(1,289)25,011

3,667
3,556
18,410(1,281)
24,353

96
(5)
(35)
55
180
8
25,25544,919

126
72
(21)
177
219
4
24,755
45,102

ARTNATURE INC. (7823) Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2022
(2) Quarterly consolidated statements of income and comprehensive income(Quarterly consolidated statements of income)(Millions of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Non-operating income
Interest income
Subsidy income
OthersTotal non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Provision of allowance for doubtful accounts
Guarantee commission
OthersTotal non-operating expenses
Ordinary income (loss)
Extraordinary income
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Impairment loss
Total extraordinary losses
Income (loss) before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
Net income (loss)
Loss attributable to non-controlling interests
Net income (loss) attributable to owners of the parent company–6–

Six months ended
September 30, 2020
14,793
5,709
9,083
9,675
(592)

Six months ended
September 30, 2021
19,3296,310
13,01911,457
1,561

27
160
18
206

23
9
34
66

3
16
2
14
8
45
(431)

―
2
116
12
5
136
1,492

0
0

―
―

0
3
3
(434)
66
(52)
13
(447)
(1)
(446)

―
4
4
1,487
651
(17)
633
853
(3)
857

ARTNATURE INC. (7823) Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2022
(Quarterly consolidated statements of comprehensive income)(Millions of yen)

Net income (loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income (loss)(Comprehensive income (loss) attributable to)
Owners of the parent company
Non-controlling interests–7–

Six months ended
September 30, 2020
(447)

Six months ended
September 30, 2021
853

92
(9)
20
104
(343)

29
77
14
121
975

(342)
(1)

979
(3)

ARTNATURE INC. (7823) Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2022
(3) Quarterly consolidated statements of cash flows(Millions of yen)Six months ended
September 30, 2020
Cash flows from operating activities
Income (loss) before income taxes
Depreciation
Impairment loss
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors’ bonuses
Increase (decrease) in provision for product warranties
Increase (decrease) in provision for point card certificates
Increase (decrease) in net defined benefit liability
Interest income
Interest expenses
Loss (gain) on sales of non-current assets
Loss on retirement of non-current assets
Decrease (increase) in notes and accounts receivable – trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable – trade
Subsidy income
Increase (decrease) in advances received
OthersSubtotalInterest income received
Interest expenses paid
Income taxes paid
Income taxes refund
Subsidies received
Net cash provided by (used in) operating activities
Cash flows from investing activities
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Long-term loan advances
Collection of long-term loans receivable
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
OthersNet cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term borrowings
Repayments of lease obligations
Cash dividends paid
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period–8–

Six months ended
September 30, 2021

(434)
466
3
86
2
(59)
75
(13)
7
85
(27)
3
(0)
0
589
(220)
(32)
(160)
1,346
(1,279)
437
33
(3)
(455)
35
160
206

1,487
425
4
86
115
23
(55)
5
(107)
114
(23)
―
―
―
387
(285)
(9)
(9)
(372)
(346)
1,438
26
―
(924)
0
9
550

210
(437)
0
(59)
―
0
(35)
25
(34)
(329)

―
(388)
―
(34)
(150)
0
(81)
27
(22)
(649)

3,000
―
(452)
2,547
(22)
2,402
16,736
19,139

―
(15)
(449)
(464)
40
(523)
18,984
18,461ARTNATURE INC. (7823) Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2022
(4) Notes on quarterly consolidated financial statements(Notes on the going concern assumption)
There is no related information.
(Notes on significant fluctuation in amounts of shareholders’ equity)
There is no related information.
(Changes in accounting policies)(Application of Accounting Standard for Revenue Recognition, etc.)
The Group has decided to apply the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020;
hereinafter the “Revenue Recognition Accounting Standard”), etc. from the beginning of the first quarter of the current fiscal
year and recognize revenue from goods or services which the Group promised to provide at an amount expected to be received
in exchange for the goods or services at the time when control over the promised goods or services has been transferred to acustomer. Major changes as a result of the application are as follows.
(1) Sales of hair-addition products
With regard to sales of hair-addition products, in the past we recognized revenue for unused hair-addition products at the timeof sale and revised the amount if products were returned subsequently. However, for the products that are expected to be
returned, we have changed it to a method of not recognizing revenue at the time of sale but recognizing refund liabilities at theamount of consideration received for the products, in accordance with the provisions for variable consideration.
(2) Periodic check service of custom-made wigs for ladies and ready-made wigs for ladies
For the periodic check service of custom-made wigs for ladies and ready-made wigs for ladies, in the past we recognizedrevenue including consideration for the service at the time of sale of products, but we have changed it to a method of identifying
the service separately from the sale of products and recording net sales when we provide customers with the check service.
(3) Points
For points given to customers at the time of selling products and providing services, in the past we recorded unused points
which were expected to be used in the future as provision for point card certificates and recognized expenses, but we havechanged it to a method of identifying the given points as performance obligations separately from the sale of products and theprovision of services and recognizing them as net sales when customers used the points (or when the points disappeared).
The application of the Revenue Recognition Accounting Standard follows the provisional treatment provided for in the proviso
of Paragraph 84 of the Revenue Recognition Accounting Standard. The cumulative effects in case of retroactively applying the
new accounting policy to before the beginning of the first quarter of the current fiscal year are adjusted in retained earnings at
the beginning of the first quarter of the current fiscal year, and the new accounting policy is applied from this initial balance.
As a result, net sales in the first six months under review decreased ¥74 million, and operating income, ordinary income andincome before taxes decreased ¥74 million, respectively. In addition, the beginning balance of retained earnings decreased¥1,072 million.
As a result of applying the Revenue Recognition Accounting Standard, we have decided to present the provision for point cardcertificates, which was presented in current liabilities in consolidated balance sheet for the previous fiscal year, by including itin “Others” of current liabilities from the first quarter of the current fiscal year. In accordance with the provisional treatment
stipulated in Paragraph 89-2 of the Revenue Recognition Accounting Standard, no reclassification has been made to theconsolidated financial statements for the previous fiscal year based on the new presentation method.
(Application of Accounting Standard for Fair Value Measurement, etc.)
The Group has decided to apply the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019;
hereinafter the “Fair Value Measurement Accounting Standard”), etc. from the beginning of the first quarter of the current
fiscal year and apply the new accounting policy stipulated in the Fair Value Measurement Accounting Standard, etc. according
to the provisional treatment provided for in Paragraph 19 of the Fair Value Measurement Accounting Standard and Paragraph44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019) into the future. The
application of the Fair Value Measurement Accounting Standard, etc. has no impact on the quarterly financial statements.

–9–