Summary of Financial Results for the Fiscal Year 2018 (Ended December 31, 2018)[Japanese GAAP]
February 8, 2019

Company name: SENSHUKAI CO.,LTD.

Stock exchange: Tokyo Stock Exchange, First Section
8165
URL: https://www.senshukai.co.jp
Mr. Kenji Kajiwara, President and Representative Director
Mr. Tetsuya Takahashi, General Manager, Corporates Headquarters
Tel: +81-6-6881-3220
Scheduled date of annual general meeting of shareholders: March 28, 2019
Scheduled date of payment of dividend: Scheduled date of filing of Annual Security Report: March 29, 2019
Preparation of supplementary materials for financial results: Yes
Holding of financial results meeting: None
Stock code:
Representative:
Inquiries:(All amounts are rounded down to the nearest millions of yen)

1. Consolidated Financial Results for the Fiscal Year 2018 (January 1, 2018 – December 31, 2018)(1) Consolidated operating results(Percentages represent changes from the same period of the previous fiscal year)
Profit attributable toOperating profit
Ordinary profit
owners of parent

Net sales
Millions of yen%

Millions of yen%

Millions of yen

Fiscal Year 2018
113,344 (10.0)(4,063)Fiscal Year 2017
125,999(2.4)(4,287)
Note: Comprehensive income (millions of yen) Fiscal Year 2018: (6,836) (-%)
Net income per
share

Diluted net income
per share

Yen

Millions of yen%(4,277)(6,027)(4,206)(11,090)
Fiscal Year 2017: (10,797) (- %)-Return on equity

Yen%

Ordinary income to Operating income
total assets
to net sales%

Fiscal Year 2018
(136.75)
Fiscal Year 2017
(213.16)
Reference: Equity in earnings (losses) of affiliates (millions of yen)

(15.8)(23.6)
Fiscal Year 2018: (27)

%

%

(5.1)
(4.4)
Fiscal Year 2017: 238

(3.6)
(3.4)

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen

Net assets per share%

Fiscal Year 201875,94934,853Fiscal Year 2017
90,441
41,548Reference: Shareholders’ equity (millions of yen) Fiscal Year 2018: 34,768

Yen

45.8
45.9
Fiscal Year 2017: 41,473

689.05797.13(3) Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents
at end of period

Millions of yen

Millions of yen

Millions of yen

Millions of yen(1,950)
1,952

3,196
(397)

(1,414)(1,148)17,147
17,323Fiscal Year 2018
Fiscal Year 2017

2. Dividends
1Q-endYen

Dividend per share
2Q-end 3Q-end Year-end
Yen

Yen

Yen

Total

Total dividends(total)Yen

Millions of yen

Payout ratio Dividend on equity(consolidated)(consolidated)%

Fiscal Year 2017
0.00
0.00
0.00
Fiscal Year 2018
0.00
0.00
0.00
Fiscal Year 2019
0.00
(forecasts)
Notes: 1. Dividend forecast for the Fiscal Year 2019 has not been determined at this time.
2. The dividend figures above show dividends for common shares. Please refer to “Dividends of classified stock”(after-mentioned) for information on dividends for shares whose rights are different from those of the Senshukaicommon shares.

%-

3. Consolidated Outlook for Fiscal Year 2019 (January 1, 2019 – December 31, 2019)(Percentages represent changes from the same period of the previous fiscal year)
Profit attributable to Net income per
Operating profit
Ordinary profit
owners of parent
share

Net sales
Millions of yen

Full Year 2019

% Millions of yen

94,000 (17.1)(700)% Millions of yen% Millions of yen

%

Yen

-

-

-

106.99(1,100)4,300

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): None
Newly added: -Excluded: -(2) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others: None
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None

(3) Number of shares outstanding (common shares)
1) Number of shares outstanding at the end of the period (including treasury shares)
Fiscal Year 2018:

52,230,393 sharesFiscal Year 2017:52,230,393 sharesFiscal Year 2017:

201,588 sharesFiscal Year 2017:52,028,126 shares

2) Number of treasury shares at the end of the period
Fiscal Year 2018:12,040,107 shares

3) Average number of shares outstanding during the period
Fiscal Year 2018:

44,080,710 shares

Note: The Senshukai shares held by the trust that are recorded as treasury shares under shareholders’ equity are includedin the number of treasury shares, and is deducted from the number of shares that is used to calculate the average
number of shares outstanding.

(Reference) Summary of Non-consolidated Financial Results
Non-consolidated Financial Results for Fiscal Year 2018 (January 1, 2018 – December 31, 2018)(1) Non-consolidated operating results(Percentages represent changes from the same period of the previous fiscal year)
ProfitOperating profit
Ordinary profit

Net sales
Fiscal Year 2018
Fiscal Year 2017

Fiscal Year 2018
Fiscal Year 2017

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

74,40689,145(16.5)(12.4)(5,211)(5,952)-(4,706)(5,565)-(6,355)(10,819)-

Net income per share

Diluted net income per share

Yen

Yen

(144.18)(207.95)-(2) Non-consolidated financial position
Total assets
Millions of yen

Net assets

Equity ratio

Millions of yen

Fiscal Year 2018
59,32732,321
Fiscal Year 2017
73,86439,318Reference: Shareholders’ equity (millions of yen) Fiscal Year 2018: 32,321

Net assets per share
%

54.5
53.2
Fiscal Year 2017: 39,318

Yen

628.14755.70* This financial report is not subject to audit by certified public accountants or auditing firms.
* Cautionary statement with respect to forward-looking statements
Cautionary statement with respect to forecasts
The above projections are based on information available at the time of release of this report. Actual results could differ
significantly from these projections due to a variety of factors. For further details regarding the projections, please refer to page
4.
How to view supplementary information at the financial results meeting
Supplementary materials for financial results will be disclosed, using the Timely Disclosure network (TDnet), and available on
the Senshukai’s website.

(Reference) Dividends of classified stock
Breakdown of dividend per share for classified stock whose rights are different from those of common shares areshown below.
Class A preferred stock

1Q-endDividend per share
3Q-end2Q-endYen

Yen

Fiscal Year 2017
Fiscal Year 201815,178,083.00
Fiscal Year 2019 (forecasts)
20,000,000.00
Note: Five shares of the Class A preferred stock were issued on March 30, 2018.

Class B preferred stock

1Q-endYen

Yen

Fiscal Year 2017
Fiscal Year 2018
Fiscal Year 2019 (forecasts)
Note: Nine shares of Class B preferred stock were issued on March 30, 2018.

Total
Yen

Yen

-

15,178,083.00
20,000,000.00

30,356,166.00
40,000,000.00

Dividend per share
3Q-end2Q-endYear-end

Yen

Year-end

Total

Yen

Yen

Yen

-

-

-

(Reference) Breakdown of dividends paid from the capital surplus
Of the dividends for the fiscal year 2018, breakdown of dividends paid from the capital surplus are shown below.
Record date2Q-endDividend per share (Yen)
15,178,083.00
Total dividends (Millions of yen)75
Note: Reduction rate in net assets due to the dividends paid from net assets

Year-end
15,178,083.00
75
2Q-end: 0.002

Total
30,356,166.00
151
Year-end: 0.002

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

Contents of Attachments
1. Overview of Results of Operations

2(1) Results of Operations

2(2) Financial Position

2(3) Cash Flows3(4) Basic Policy Regarding Distribution of Earnings and Dividends in the Current and Next Fiscal Years

4(5) Outlook

4(6) Important Information about Going Concern Assumption

4

2. Basic Approach for the Selection of Accounting Standards

5

3. Consolidated Financial Statements and Notes

6(1) Consolidated Balance Sheet

6(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income

8

Consolidated Statement of Income

8

Consolidated Statement of Comprehensive Income

9(3) Consolidated Statement of Changes in Equity

10(4) Consolidated Statement of Cash Flows

12(5) Notes to Consolidated Financial Statements

13

Going Concern Assumption

13

Additional Information

13

Segment Information

14

Per Share Information

16

Significant Subsequent Events

16

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SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

1. Overview of Results of Operations(1) Results of Operations
Overview
In 2018, the Japanese economy recovered slowly as corporate earnings, the employment situation and personal
income continued to improve. However, the outlook remained uncertain because of concerns about the U.S. -China
trade issues, political and economic events in emerging countries, and other reasons. In Japan’s retail industry, theoperating environment for the Senshukai Group continued to be challenging. The growth of real income issluggish because of the slow pace of wage increases and rising prices of consumer goods. As a result, consumers
are taking a defensive stance toward spending. Retail companies need to adapt to budget-minded consumer
spending and the increasingly diversified values of consumers. Rising rates for transporting merchandise andmore competition from companies outside the retail sector are other sources of challenges.
There was a reexamination of the sales channel strategy and marketing policies in the mail-order business,revisions to merchandising activities, and other actions during 2018. Despite these measures, sales decreased
10.0% to 113,344 million yen because the complexity of the Senshukai Group’s business structure slowed down
the pace of progress.
In the mail-order business, the gross profit margin was down significantly due to actions for lowering inventories
to the proper level. These actions included posting a loss on the removal of inventories, a valuation loss oninventories scheduled for disposal, and the sale of merchandise at reduced prices. As a result, there was an
operating loss of 4,063 million yen compared with a 4,287 million yen loss in 2017 and an ordinary loss of 4,277
million yen compared with a loss of 4,206 million yen in 2017. The loss attributable to owners of parent was
6,027 million yen compared with a loss of 11,090 million yen in 2017. This loss was mainly the result of special
retirement payments for a voluntary retirement program.
Overview by segment(Mail-order Business)
Consolidated sales in the mail-order business, centered on the catalog and the Internet businesses, decreased
14.6% year-over-year to 86,452 million yen in 2018. There was an operating loss of 5,633 million yen comparedwith a loss of 5,707 million yen in 2017.
(Bridal Business)
Consolidated sales in the bridal business, centered on the house wedding business, increased 6.9% year-over-year
to 19,386 million yen. Operating profit increased 4.3% year-over-year to 1,004 million yen.
(Corporates Business)
Consolidated sales in the corporates business, which provides products and services to corporations, increased
6.8% year-over-year to 5,161 million yen, and operating profit decreased 9.5% year-over-year to 339 million yen.
(Others)
Consolidated sales in other businesses, which consist of services (primarily childcare support, insurance andcredit card services), increased 33.7% year-over-year to 2,343 million yen because of the July 2017 acquisition of
Huit Laboratories, Inc. which manufactures and sells cosmetics. Operating profit increased 178.3% year-over-year
to 225 million yen.
(2) Financial Position
Assets totaled 75,949 million yen at the end of 2018, a decrease of 14,491 million yen from the end of 2017.
Current assets decreased 8,447 million yen to 40,406 million yen. The main factors were decreases of 6,828
million yen in merchandise and finished goods and 1,106 million yen in accounts receivable-other. Non-current
assets decreased 6,044 million yen to 35,542 million yen. The factors included decreases of 1,953 million yen inproperty, plant and equipment, 242 million yen in intangible assets, and 3,848 million yen in investments andother assets.
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SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

Current liabilities decreased 1,296 million yen to 28,770 million yen. The main factors were decreases of 2,774
million yen in electronically recorded obligations-operating, 1,286 million yen in accounts payable-trade and 370
million yen in other, while there was an increase of 4,340 million yen in current portion of bonds with shareacquisition rights. Non-current liabilities decreased 6,500 million yen to 12,326 million yen. The main factors
were decreases of 5,000 million yen in bonds with share acquisition rights and 813 million yen in long-term loans
payable.
Net assets decreased 6,695 million yen to 34,853 million yen. The main factor was an increase of 6,784 million
yen in treasury shares as a result of the share repurchase through off-auction own share repurchase trading system(ToSTNeT-3), while there was an increase of 1,333 million yen in retained earnings. Capital stock and legal
capital surplus increased by 3,500 million yen each because of the March 2018 sale of newly issued preferredstock through a third-party allotment to Regional Economy Vitalization Corporation of Japan (REVIC), which ismanaged by REVIC Partners Co., Ltd. as the unlimited liability partner. Based on the Article 447, Clause 1 andArticle 448, Clause 1 of the Companies Act, Senshukai reduced capital stock and legal capital surplus by 3,500
million yen each, and transferred these amounts to other capital surplus on April 2018. Furthermore, in
accordance with the provisions of Article 452 of the Companies Act, to eliminate the retained earnings deficit, thecapital surplus decreased by 7,071 million yen and retained earnings were increased by the same amount. As aresult, the equity ratio was 45.8%.
(3) Cash FlowsThe balance of cash and cash equivalents at the end of 2018 was 17,147 million yen, a decrease of 176 million
yen from the end of 2017.
Operating activities used net cash of 1,950 million yen (net cash provided of 1,952 million yen in 2017). The main
cash inflows were a decrease in inventories of 6,778 million yen and depreciation of 1,807 million yen. The main
cash outflows include a loss before income taxes of 6,016 million yen, a decrease in notes and accounts
payable-trade of 3,588 million yen and payments for business structure reform expenses of 1,960 million yen.
Investing activities provided net cash of 3,196 million yen (net cash used of 397 million yen in 2017). The main
cash inflows include proceeds from sales of property, plant and equipment of 2,527 million yen and proceeds fromwithdrawal of time deposits of 2,226 million yen. The main cash outflows include 1,997 million yen for thepurchase of property, plant and equipment.
Financing activities used net cash of 1,414 million yen (net cash used of 1,148 million yen in 2017). The main
cash inflows include the proceeds from issuance of common shares of 6,975 million yen. The main cash outflows
were 6,785 million yen for the purchase of treasury shares and 1,371 million yen for the repayments of long-termloans payable.
Cash flow indicesFiscal Year 2016
Fiscal Year 2017
Fiscal Year 2018
(As of Dec. 31, 2016) (As of Dec. 31, 2017) (As of Dec. 31, 2018)
Equity ratio (%)
51.5
45.9
45.8
Equity ratio based on fair value (%)
36.1
37.3
13.7
Ratio of interest-bearing debt to cash flows (years)
5.0
9.3
Interest coverage ratio (times)
23.7
12.6
Notes: 1. Cash flow indices are calculated, using consolidated financial figures, as follows:
The equity ratio is shareholders’ equity divided by total assets.
The equity ratio based on fair value is market capitalization divided by total assets.
The ratio of interest-bearing debt to cash flows is interest-bearing debt divided by the quantity of operating cash flows.
The interest coverage ratio is operating cash flows divided by interest payments.
2. Market capitalization is calculated by multiplying the closing share price at the end of the period by the number ofshares issued and outstanding at the end of the period, excluding treasury shares.
3. Interest-bearing debt includes short-term loans payable, bonds with subscription rights to shares including current
portion, long-term loans payable, and lease obligations shown on the consolidated balance sheet.
4. Operating cash flows and interest payments represent net cash provided by (used in) operating activities andinterest expenses paid, respectively, on the consolidated statement of cash flows.
5. Ratio of interest-bearing debt to cash flows and interest coverage ratio are not shown for Fiscal Year 2018 because
operating cash flows were negative.

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SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018(4) Basic Policy Regarding Distribution of Earnings and Dividends in the Current and Next Fiscal Years
The Group’s basic policy is to strengthen the business foundation while maintaining stable dividends, taking into
consideration the payout ratio, and ensuring a fair distribution of earnings to shareholders that reflects its businessperformance.
Specifically, the Group’s policy regarding the distribution of earnings to shareholders is to strive continuously fora payout ratio of 30% on a consolidated basis. However, because of a net loss in 2018, we plan to pay no regulardividend for 2018. We also plan to pay no interim dividend in 2019 and have not made a decision about the
year-end dividend. Our highest priorities are the implementation of our medium-term management plan and thegrowth of shareholders’ equity from the standpoint of the stability and safety of business operations.
(5) Outlook
Consolidated
Net sales

Operating profit(Millions of yen)
Profit attributable toOrdinary profit
owners of parent(1,100)
4,300

Fiscal Year 2019 (forecast)

94,000(700)

Fiscal Year 2018 (results)

113,344(4,063)(4,277)(6,027)(17.1)---

Change (%)

We forecast a 17.1% decrease in net sales because of the challenging operating environment for the Senshukai
Group and the negative impact of ongoing measures to achieve the proper size of the mail -order business, such as
by reducing the number of sizes and models of merchandise.
We forecast much smaller losses in 2019 and a profit attributable to owners of parent. We expect the higher costof logistics and other factors to exert downward pressure on profitability. However, we foresee benefits in the
mail-order business from measures in 2018 to reduce inventories and adjust personnel expenses to the proper leveland make other improvements. In addition, we believe that the performance of the bridal and other businesses will
be about the same as in 2018. There will be more business structural reforms in 2019 and the benefits of some ofthese initiatives, including the operation reform, will probably not start appearing until 2020. Based on thisoutlook, we forecast operating and ordinary losses but a profit attributable to owners of parent becau se of
expected gain on the sale of non-current assets. Due to benefits from the business structural reforms, most ofwhich will be completed in 2020, we expect to become profitable in 2020.
* The above projections are based on information available at the time of release of this report. Actual results could differ fromprojections due to a variety of factors.

(6) Important Information about Going Concern Assumption
In 2017, Senshukai Group had a consolidated operating loss of 4,287 million yen and a consolidated loss
attributable to owners of parent of 11,090 million yen. In 2018, there was an operating loss of 4,063 million yen
and a loss attributable to owners of parent of 6,027 million yen. These losses create significant doubts about thegoing concern assumption. To eliminate these doubts and improve results of operations, business structuralreforms centered on the mail-order business are under way in accordance with a medium-term management planthat started in 2019 and will end in 2021.
This plan include following initiatives:(1) Reduce the mail-order business to the proper size by cutting the number of sizes and models of merchandise
sold, lowering inventories and taking other actions.
(2) Improve operations by shortening lead times for producing merchandise, selling a higher percentage ofmerchandise at list prices, holding down the occurrence of surplus inventories, increasing joint activities with
suppliers and taking other actions.
(3) Rebuild the model for attracting customers, centered on catalogs, by establishing a model for attracting
customers that combines analog and digital elements, reexamining the media plan and catalog distribution
method, improving the quality of customer interactions by upgrading digital marketing and Internet customer
contact, and taking other actions.

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SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018(4) Reexamine the group’s organizational structure and human resource systems by combining and eliminatingorganizational units, using voluntary retirement program, and taking other actions.
(5) Cut costs and reduce assets, centralizing activities at each department, selling Osaka head office, and taking
other actions.
(6) Reorganize the Senshukai Group by merging subsidiaries that perform functions, and taking other actions.
Some initiatives in the mail-order business have already been completed, such as reductions in inventories andadjustment of personnel expenses to proper level. We expect the benefits of these actions to start to emerge in
2019. Furthermore, we plan to use a new marketing strategy for strengthening sales capabilities in order to start
growing again. We are determined to use these measures to construct a solid earnings foundation and renewed
growth in order to achieve a recovery in sales and earnings and stabilize the performance of the Senshukai Group.
At the end of 2018, cash and deposits were 17,150 million yen. Senshukai also has a committed credit line withthe total amount of 10 billion yen with financial institutions. Consequently, we believe there are no concerns
about our liquidity because we have a sufficient amount of working capital.
For these reasons, we believe there are no significant uncertainties regarding the going concern assumption.
2. Basic Approach for the Selection of Accounting Standards
The Senshukai Group has a policy of preparing its consolidated financial statements using Japanese GAAP for thetime being to facilitate comparisons with prior-year performance and the performance of other companies in Japan.
We will take suitable actions with regard to the application of the International Financial Reporting Standards(IFRS) by taking into account trends in our industry peers in Japan and associated factors in Japan and othercountries.

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SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

3. Consolidated Financial Statements and Notes(1) Consolidated Balance Sheet(Millions of yen)
Fiscal Year 2018
(As of Dec. 31, 2018)

Fiscal Year 2017
(As of Dec. 31, 2017)
AssetsCurrent assets
Cash and deposits

17,32817,150Notes and accounts receivable-trade

5,481

5,532

Merchandise and finished goods

16,561

9,732

Raw materials and supplies

171

186

Accounts receivable-other

7,216

6,110

Other

2,242

1,828

Allowance for doubtful accounts

(147)

(133)

48,85440,406

Buildings and structures, net

40,43937,935

Accumulated depreciation(26,722)(24,329)

Buildings and structures, net

13,716

13,606

Machinery, equipment and vehicles

8,522

6,691

(8,309)(6,400)213

290

Tools, furniture and fixtures

2,493

2,351

Accumulated depreciation(2,188)(2,036)305

314

10,451

8,477

Total current assets
Non-current assets
Property, plant and equipment

Accumulated depreciation
Machinery, equipment and vehicles, net

Tools, furniture and fixtures, net
Land
Leased assets

741

652

Accumulated depreciation

(419)

(373)

Leased assets, net

321

279

Construction in progress

8

95

25,01623,063

1,992

1,736

715

729

2,708

2,466

Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities

7,630

6,458

Long-term loans receivable

770

692

Lease and guarantee deposits

1,942

1,888

Other

3,784

1,154

Allowance for doubtful accounts

(265)

(180)

Total investments and other assets

13,861

10,012

41,58635,54290,44175,949Total non-current assets
Total assets-6-

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

(Millions of yen)
Fiscal Year 2018
(As of Dec. 31, 2018)

Fiscal Year 2017
(As of Dec. 31, 2017)
Liabilities
Current liabilities
Electronically recorded obligations-operating

9,406

6,631

Accounts payable-trade

6,123

4,836

Short-term loans payable

1,416

1,468

-

4,340

Current portion of bonds with share acquisition rights
Lease obligations

112

112

Accounts payable-other

7,066

6,708

Accrued expenses

1,452

1,200

Income taxes payable

222

318

Accrued consumption taxes

416

66

Provision for sales promotion expenses

408

305

Provision for bonuses

581

291

Other

2,860

2,489

Total current liabilities

30,066

28,770Non-current liabilities
Bonds with share acquisition rights

5,000

-

Long-term loans payable
Lease obligations

10,613

9,799

1,031

918

Deferred tax liabilities

943

529

Deferred tax liabilities for land revaluation

202

74

Net defined benefit liability

81

69

Provision for management board incentive plan trust

7

2

Asset retirement obligations

735

778

Other

212

153

18,826

12,32648,892

41,096

Capital stock

22,30422,304

Capital surplus

23,86023,712Retained earnings(4,859)(3,526)

Treasury shares(149)(6,932)

41,15535,558

1,216

605

219

60

Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity

Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land

(1,056)(1,346)

Foreign currency translation adjustment

(40)

(61)

Remeasurements of defined benefit plans

(19)

(47)

Total accumulated other comprehensive income

318

(789)

74

84

41,54834,85390,44175,949Non-controlling interests
Total net assets
Total liabilities and net assets-7-

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income(Consolidated Statement of Income)Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Freightage and packing expenses
Promotion expenses
Provision for allowance for sales promotion expenses
Provision of allowance for doubtful accounts
Bad debts expenses
Directors’ compensations
Salaries and allowances
Bonuses
Provision for bonuses
Depreciation
Other
Total selling, general and administrative expenses
Operating loss
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity
methodGain on adjustment of account payable
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity
methodCommission fee
Miscellaneous loss
Total non-operating expenses
Ordinary loss
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Subsidy income
Other
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Loss on reduction of non-current assets
Impairment loss
Business structure reform expenses
Loss on liquidation of termination of deposit account
Other
Total extraordinary losses
Loss before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
Loss
Profit attributable to non-controlling interests
Loss attributable to owners of parent

Fiscal Year 2017
(Jan. 1, 2017 – Dec. 31, 2017)
125,999
71,43754,561(Millions of yen)
Fiscal Year 2018
(Jan. 1, 2018 – Dec. 31, 2018)
113,344
65,01948,325

6,771
14,149
408
146
18
357
10,531
910
571
2,154
22,83058,848(4,287)

6,179
11,283
305
117
317
8,515
494
553
1,758
22,862
52,388(4,063)

27
87

29
60

238

-

191
175
720

271
220
582

155

145

-

27

316
167
639
(4,206)

518
105
796
(4,277)

4
715
210
4
935

25
517
46
590

55
198
5,473
1,902
0
7,629
(10,899)
175
4
179(11,079)
10(11,090)

36
46
489
1,459
273
22
2,329
(6,016)256(255)
1(6,018)9(6,027)-8-

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

(Consolidated Statement of Comprehensive Income)Fiscal Year 2017
(Jan. 1, 2017 – Dec. 31, 2017)
Loss(11,079)(Millions of yen)
Fiscal Year 2018
(Jan. 1, 2018 – Dec. 31, 2018)(6,018)Other comprehensive income
Valuation difference on available-for-sale securities

(66)

(611)

Deferred gains or losses on hedges

97

(171)

Foreign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method

13

(13)

238

(22)

Total other comprehensive income
Comprehensive income

282

(818)

(10,797)(6,836)(10,807)(6,846)10

9Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests-9-

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

(3) Consolidated Statement of Changes in Equity
Fiscal Year 2017 (Jan. 1, 2017 – Dec. 31, 2017)(Millions of yen)

Balance at beginning of current
periodChanges of items during period

Capital stock

Capital surplus

22,30423,860Shareholders’ equity
Retained
Treasury sharesearnings

Dividend of surplus
Loss attributable to owners ofparentPurchase of treasury shares
Disposal of treasury shares
Reversal of revaluation reserve
for land
Change of scope of
consolidation
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current period

12,385

Total shareholders’equity(151)

58,399

(208)

(208)

(11,090)(11,090)

0

(0)

(0)

1

1

(5,927)(5,927)

(20)

(20)

-

0

(17,245)1(17,243)

22,30423,860(4,859)(149)

41,155(Millions of yen)

Accumulated other comprehensive income
Valuation
Total
NonDeferred
Foreigndifference on
Revaluation
Remeasurements accumulated controlling Total net
gains orcurrency
assetsavailable-forreserve forof defined
otherinterests
losses ontranslation
sale
land
benefit plans comprehensive
hedgesadjustment
securities
incomeBalance at
beginning ofcurrent period
Changes of items
during period
Dividend of
surplus
Loss attributableto owners ofparentPurchase oftreasury shares
Disposal oftreasury shares
Reversal ofrevaluation
reserve for land
Change of scopeof consolidation
Net changes of
items other thanshareholders’equityTotal changes of
items during
periodBalance at end ofcurrent period

1,271

(11)

(6,983)

(143)

(23)

(5,890)64

52,572(208)(11,090)(0)
1(5,927)
(20)

(55)

230

5,927

103

3

6,209

10

6,219

(55)

230

5,927

103

3

6,209

10

(11,024)

1,216

219

(1,056)

(40)

(19)

318

74

41,548- 10 -SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

Fiscal Year 2018 (Jan. 1, 2018 – Dec. 31, 2018)(Millions of yen)

Balance at beginning of current
periodChanges of items during period
Issuance of new shares
Dividends of surplus-othercapital surplus
Transfer to other capitalsurplus from capital stock
Loss attributable to owners ofparentDeficit disposition

Shareholders’ equity
Retained
Treasury sharesearnings

Capital surplus

22,30423,860

3,500

3,500

7,000

(75)

(75)

3,500

-

(3,500)(4,859)(149)

41,155(6,027)(7,071)(6,027)

7,071

Purchase of treasury shares
Disposal of treasury shares
Reversal of revaluation reserve
for landNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current period

Total shareholders’equityCapital stock

0(6,785)(6,785)

2

2

289

289

-

(147)

1,333

(6,782)(5,596)22,30423,712(3,526)(6,932)35,558(Millions of yen)

Accumulated other comprehensive income
Valuation
Total
NonDeferred
Foreigndifference on
Revaluation
Remeasurements accumulated controlling Total net
gains orcurrency
assetsavailable-forreserve forof defined
otherinterests
losses ontranslation
sale
land
benefit plans comprehensive
hedgesadjustment
securities
incomeBalance at
beginning ofcurrent period
Changes of items
during period
Issuance of newsharesDividends ofsurplus-othercapital surplus
Transfer to othercapital surplus
from capital
stock
Loss attributableto owners ofparentDeficitdisposition
Purchase oftreasury shares
Disposal oftreasury shares
Reversal ofrevaluation
reserve for land
Net changes of
items other thanshareholders’equityTotal changes of
items during
periodBalance at end ofcurrent period

1,216

219

(1,056)

(40)

(19)

318

74

41,548

7,000
(75)

-

(6,027)(6,785)
2
289

(610)

(158)

(289)

(20)

(28)

(1,108)9(1,098)

(610)

(158)

(289)

(20)

(28)

(1,108)9(6,695)605

60(1,346)

(61)

(47)

(789)

84

34,853- 11 -SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

(4) Consolidated Statement of Cash Flows
Fiscal Year 2017
(Jan. 1, 2017 –Dec. 31, 2017)
Cash flows from operating activities
Loss before income taxes
Depreciation
Impairment loss
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for sales promotion expenses
Increase (decrease) in provision for bonuses
Interest and dividend income
Interest expenses
Share of (profit) loss of entities accounted for using equity method
Loss (gain) on sales of investment securities
Loss (gain) on sales and retirement of non-current assets
Loss on reduction of non-current assets
Subsidy income
Payments for business structure reform expenses
Loss on liquidation of termination of deposit accountDecrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes (paid) refund
Payments for business structure reform expenses
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Proceeds from subsidy income
Proceeds from withdrawal of time deposits
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries
Proceeds from capital reduction with compensation of subsidiaries and affiliates
Payments for sales of shares of subsidiaries resulting in change in scope of
consolidation
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Payment for redemption of bonds with share acquisition rights
Proceeds from issuance of common shares
Purchase of treasury shares
Cash dividends paid
Other, net
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
Increase (decrease) in cash and cash equivalents resulting from change of scopeof consolidation
Cash and cash equivalents at end of period- 12 -(Millions of yen)
Fiscal Year 2018
(Jan. 1, 2018 –Dec. 31, 2018)(10,899)
2,196
5,473
(5)
(29)
581
(114)
155
(238)
(715)
50
198
(210)
1,902
(1,503)
4,454
2,086
(302)
(858)
183
2,403
132
(154)
(428)
1,952

(6,016)
1,807
489
(98)
(102)
(290)
(90)
145
27
(516)
10
46
(46)
1,459
273
(100)
6,778
1,334
(3,588)(1,333)
29
219
107
(145)
(172)
(1,960)(1,950)(1,165)
5
(529)
309
(150)
1,754
(835)
450

(1,997)
2,527
(570)
46
2,226
(138)
849
-

(302)

-

65
(397)

252
3,196

40
2,800
(1,656)(2,000)
(0)
(209)
(122)
(1,148)(39)366
16,60010600(1,371)(653)
6,975(6,785)(77)(112)(1,414)(8)(176)
17,323357-

17,323

17,147SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Additional Information
Liquidation of a Consolidated Subsidiary
On October 26, 2018, the Board of Directors of Senshukai approved a resolution to liquidate consolidated
subsidiary Feel Life Inc.
1. Reason for liquidation
Feel Life Inc. was established in 2017 for the purpose of creating a stronger framework in the mail -orderbusiness for selling merchandise to the senior age segment. All business operations of JFR Online Co. Ltd. weretransferred to Feel Life on March 1, 2017. Although the goal was to achieve growth by operating this senior age
segment business as a separate company, progress toward this goal has been slower than expected. Performancehas been held back by the cost of the infrastructure that is required for a comprehensive mail-order ande-commerce business, the difficulty of capturing synergies with Belle Maison, and the difficulty of retaining theloyalty of customers in this age segment.
Another problem was the big downturn in the mail-order business of Senshukai that created an urgent need tofocus resources on decisive business structural reforms. In response to this situation, we reassessed the
profitability and growth prospects of Feel Life as well as the similarities between its operations and thebusinesses of Senshukai. This process led to the conclusion that the best course of action is to unify activities
concerning the loyalty of customer segments at Senshukai and use a single infrastructure for the business
operations of the Feel Life and Senshukai. Therefore, the decision was made to transfer customer informationand other resources at Feel Life to Senshukai for centralized operations and liquidate Feel Life.
Feel Life will continue to operate until May 31, 2019, after which part of its business operations will betransferred to Senshukai and the company will be liquidated.
2. Outline of the subsidiary(1) Name:(2) Business:(3) Investment ratio:

Feel Life Inc.
Mail-order business
Wholly owned by Senshukai

3. Schedule Resolution of the Senshukai Board of Directors:
 Extraordinary general meeting of shareholders (Senshukai and Feel Life):
 Completion of liquidation:

October 26, 2018
June 30, 2019 (tentative)
September 2019 (tentative)

4. Financial position of Feel Life (as of December 31, 2018)
Net assets:
Total assets:
Total liabilities:

97 million yen
1,536 million yen
1,439 million yen

5. Estimated loss on liquidation
Business structure reform expenses of 69 million yen were recorded as extraordinary losses in 2018.
6. Significant effects of the liquidation on business activities
Senshukai believes that the liquidation of Feel Life will have only a negligible effect on business activities of theGroup.

- 13 -SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

Segment Information
1. Overview of reportable segment
Segments used for financial reporting are Senshukai’s constituent units for which separate financial information
is available and for which the Board of Directors performs periodic studies for the purposes of determining theallocation of resources and evaluating performance.
The Senshukai Group primarily operates the mail-order business, bridal business, and corporates business, andSenshukai and its group companies manage each of these businesses according to these classifications.
Therefore the Group, comprised of these different business segments, has three reportable segments: themail-order business, bridal business, and corporates business.
The mail-order business is engaged in mail-order sales via a variety of media centered on catalogs and theInternet. The bridal business provides mostly house wedding services. The corporates business uses Senshukai’s
infrastructure to provide solutions services and promotional services targeting mail -order companies ande-commerce businesses.
2. Calculation methods for sales, profit or loss, assets, and other items for each reportable segment
The accounting methods for reportable segments are the same as those used for preparing the consolidated
financial statements.
Profits (loss) for reportable segments are generally operating profit (loss) figures.
Inter-segment sales or transfers are based on market prices.
3. Information related to sales and profit or loss, assets, and other items for each reportable segment
Fiscal Year 2017 (Jan. 1, 2017 – Dec. 31, 2017)
Reportable segment(Millions of yen)Amounts shown on
Adjustment
consolidated(Note 2) financial statements(Note 3)Mail-orderbusiness

Bridalbusiness

Corporates
business

Sub-total

Others(Note 1)

Total

Sales to customers
Inter-segment sales
or transfers
Total

101,279

18,132

4,833

124,245

1,753

125,999-

125,999

1,016

1

160

1,178

33

1,212

(1,212)-102,295

18,134

4,994

125,424

1,787

127,211(1,212)125,999

Segment profit (loss)(5,707)963

375(4,368)80(4,287)

0(4,287)

Segment assets

68,155

20,220868

89,2442,142

91,386(945)

90,441

Net sales

Other items
Depreciation
1,117
1,025
25
2,168
28
2,196
2,196
Amortization of
216
216
20
236
236
goodwill
Investment inequity-method
547
3,358
3,905
3,905
3,905
affiliates
Increase in property,
plant and equipment
1,063
414
0
1,478
69
1,548
1,548
and intangible assets
Notes: 1. Others represent the businesses which are not included in any of the three reportable segments and consist of the s ervices
business, which is primarily the insurance and credit card services, and childcare business.
2. Adjustments are as follows.
(1) The 0 million yen adjustment to segment profit (loss) is an elimination for inter-segment transactions.
(2) The (945) million yen adjustment to segment assets is an elimination for inter-segment transactions.
3. Segment profit (loss) is adjusted to be consistent with the operating loss on the consolidated statement of income.

- 14 -SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

Fiscal Year 2018 (Jan. 1, 2018 – Dec. 31, 2018)
Reportable segment(Millions of yen)Amounts shown on
Adjustment
consolidated(Note 2) financial statements(Note 3)Mail-orderbusiness

Bridalbusiness

Corporates
business

Sub-total

Others(Note 1)

Total

Sales to customers
Inter-segment sales
or transfers
Total

86,452

19,386

5,161

111,001

2,343

113,344-

113,344

1,015

0

168

1,184

52

1,236

(1,236)-87,46819,386

5,330

112,185

2,395

114,581(1,236)113,344

Segment profit (loss)(5,633)

1,004

339

(4,288)225(4,063)0(4,063)

Segment assets

53,006

21,192872

75,071

2,183

77,254(1,305)75,949Net sales

Other items
Depreciation
771
966
21
1,758
49
1,807
1,807
Amortization of
216
216
40
256
256
goodwill
Investment inequity-method
610
3,265
3,876
3,876
3,876
affiliates
Increase in property,
plant and equipment
916
1,894
10
2,821
241
3,062
3,062
and intangible assets
Notes: 1. Others represent the businesses which are not included in any of the three reportable segments and consist of thechildcare support business, services business and manufacturing and sales of cosmetics.
2. Adjustments are as follows.
(1) The 0 million yen adjustment to segment profit (loss) is an elimination for inter-segment transactions.
(2) The (1,305) million yen adjustment to segment assets is an elimination for inter-segment transactions.
3. Segment profit (loss) is adjusted to be consistent with the operating loss on the consolidated statement of income.

4. Information related to impairment of non-current assets for each reportable segment
Fiscal Year 2017 (Jan. 1, 2017 – Dec. 31, 2017)
Mail-orderbusiness
Impairment loss

(Millions of yen)

Bridalbusiness

4,877

Corporates
business

550

Elimination or
corporate

Others-44-

Fiscal Year 2018 (Jan. 1, 2018 – Dec. 31, 2018)
Mail-orderbusiness
Impairment loss

476

Total
5,473

(Millions of yen)

Bridalbusiness

Corporates
business10-- 15 -

Elimination or
corporate

Others
3

-

Total
489

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

Per Share Information
Fiscal Year 2017
(Jan. 1, 2017 – Dec. 31, 2017)797.13

Net assets per share(Yen)
Fiscal Year 2018
(Jan. 1, 2018 – Dec. 31, 2018)
689.05Net loss per share(213.16)(136.75)
Notes: 1. Diluted net income per share is not presented since Senshukai has outstanding dilutive securities, though posted a net loss.
2. Senshukai’s stock held by the executive stock compensation trust is included in treasury shares, which are deducted fromthe number of shares outstanding at the end of the period for the calculation of net assets per share (deduction of 1 77,000
shares in Fiscal Year 2017 and 174,000 shares in Fiscal Year 2018). In addition, this trust stock is included in treasury
shares, which are deducted from the average number of shares outstanding during the period for the calculation of net
loss per share (deduction of 178,000 shares in Fiscal Year 2017 and 177,000 shares in Fiscal Year 2018).
3. Basis for calculation of net loss per share is as follows.
(Millions of yen)
Fiscal Year 2017
Fiscal Year 2018
(Jan. 1, 2017 – Dec. 31, 2017)(Jan. 1, 2018 – Dec. 31, 2018)
Net loss per share
Loss attributable to owners of parent(11,090)(6,027)

Amounts unavailable to common shareholders--[Including: dividends for Class A preferred stock]

[ -]

[ -]

(11,090)(6,027)52,02844,080--Loss attributable to owners of parent
Average number of shares outstanding during the period(thousand shares)
Number of residual securities with no dilution excluded
from calculation of diluted net income per share

Significant Subsequent Events(Sale of part of subsidiary’s shares and third-party allotment of shares by a subsidiary resulting in a change in thescope of consolidation)
On October 12, 2018, the Board of Directors of Senshukai approved a resolution for an agreement between
consolidated subsidiary Belle Neige Direct Co., Ltd. (“BND”) and Megmilk Snow Brand Co., Ltd. (“MSB”) for
the sale of part of the shares of BND held by Senshukai to MSB and the use of a third-party allotment to sell
newly issued BND shares to MSB. The agreement was conducted on January 9, 2019.
After this sale and the third-party allotment, Senshukai’s equity interest in BND is 33.4% and this company has
become an equity-method affiliate of Senshukai.
1. Reason for the sale of part of BND shares and third-party allotment
BND operates a mail-order business for the sale of functional food products, gifts for family members and family
events, and other merchandise. Sales have been firm, but functional food products have increased significantly asa share of total sales during the past several years. MSB has been building a framework for the growth of its ownfunctional food business. As part of measures to establish this business model, MSB decided to purchaseadditional BND shares in order to make this company a subsidiary.
Following this change in the ownership structure of BND, Senshukai believes that this company can continue toconsistently capitalize on business opportunities by combining its own expertise with the knowledge andresources of Senshukai and MSB.
2. Name of company purchasing BND shares
MEGMILK SNOW BRAND Co., Ltd.
3. Schedule Conclusion of share sale agreement:
 Sale of shares:
 BND third-party allotment:

December 19, 2018
January 9, 2019
January 9, 2019- 16 -SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

4. Outline of the subsidiary
Name:Business:
Relationship with Senshukai:

Belle Neige Direct Co., Ltd.
Mail-order business and associated subcontracting, food sales
operations, household product sales operations and other activities
Some Senshukai directors are concurrently BND directors andSenshukai guarantees the debt of BND.

5. Change in ownership of BND(1) Senshukai sold 3,324 shares of BND to MSB.
(2) MSB also purchased 3,324 shares of BND shares through a third-party allotment by BND.
(3) The ownership of BND changed as follows due to these two sales of BND shares.
Before change
After change
8,895 shares
5,571 shares
Senshukai(66.6%)(33.4%)
4,460 shares
11,108 shares
MSB(33.4%)(66.6%)
Total
13,355 shares
16,679 shares* The share of voting rights held is in parentheses.
* The amount paid for BND shares is not disclosed due to an agreement with MSB.
6. Outlook
This matter will have only a negligible effect on consolidated financial results at this point.
(Absorption and merger of consolidated subsidiaries, and merger of two consolidated subsidiaries)
On October 26, 2018, the Board of Directors of Senshukai approved resolutions to absorb and merge withconsolidated subsidiaries Senshukai General Services Co., Ltd. and Senshukai Business Services Co., Ltd., andto merge consolidated subsidiaries Senshukai Call Center Co., Ltd. and Sens hukai Service Hanbai Co., Ltd. The
mergers were conducted on January 1, 2019.
I. Absorption and merger of consolidated subsidiaries
1. Purpose of merger
Senshukai General Services provides insurance and credit card services and Senshukai Business Services
performs administrative services for Senshukai. These subsidiaries have merged with Senshukai for the purposeof using the Senshukai Group’s resources more effectively and efficiently.
2. Summary of merger(1) Name and business activities of merging companies
Surviving company
Name:
SENSHUKAI CO.,LTD.
Business: Mail-order business, bridal business, corporates business and other businesses
Dissolved company 1
Name:
Senshukai General Services Co., Ltd.
Business: Services business
Dissolved company 2
Name:
Senshukai Business Services Co., Ltd.
Business: Services business(2) Date of merger
January 1, 2019- 17 -SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018(3) Method of merger
An absorption-type merger between Senshukai, which will be the surviving company, and Senshukai
General Services and Senshukai Business Services, which are liquidated.
(4) Company’s name after merger
SENSHUKAI CO.,LTD.
3. Summary of accounting methods applied
Accounting methods used for this merger as a transaction under common control are based on “AccountingStandard for Business Combinations” and “Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures.”II. Merger of two consolidated subsidiaries
1. Purpose of merger
Senshukai Call Center operates a telemarketing business and Senshukai Service Hanbai performs sales
promotion and new customer acquisition activities in the mail-order business. These companies have merged forthe purpose of using the Senshukai Group’s resources more effectively and efficiently.
2. Summary of merger(1) Name and business activities of merging companies
Surviving company
Name:
Senshukai Call Center Co., Ltd.
Business: Telemarketing business
Dissolved company
Name:
Senshukai Service Hanbai Co., Ltd.
Business: Sales promotion and new customer acquisition activities(2) Date of merger
January 1, 2019(3) Method of merger
An absorption-type merger between Senshukai Call Center, which will be the surviving company, andSenshukai Service Hanbai, which is liquidated.
(4) Company’s name after acquisition
Senshukai Call Center Co., Ltd.
3. Summary of accounting methods applied
Accounting methods used for this merger as a transaction under common control are based on “AccountingStandard for Business Combinations” and “Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures.”- 18 -SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2018

(Sale of significant assets)
On January 25, 2019, the Board of Directors of Senshukai approved a resolution to sell non-current assets asfollows.
1. Reason for sale
The decision was made to sell the following non-current assets as part of activities to locate all businessdepartments and group companies in a single location. Centralizing these activities is expected to increase theefficiency of asset utilization and business operations as well as to improve earnings.
2. Assets to be sold and purchasers
Description and location
Gain on sale (estimate)
Category
Land and buildings
5,537 million yen
Osaka head office
1-8-9 Doshin, Kita-ku, Osaka, othres
Note: The purchaser, selling price and book value are not disclosed due to the wishes of the purchaser.
Senshukai has no financial, personnel or business relationships with the purchaser. The purchaser is not a
related-party of Senshukai.
3. Schedule Contract signing: Closing date:

January 25, 2019
March 29, 2019

4. Effect on earnings
Due to this sale, the gain on sales of non-current assets of 5,537 million yen will be recorded as extraordinary
income in the first quarter of 2019.

* This financial report is solely a translation of summary of “Kessan Tanshin” (in Japanese, including attachments), which ha s
been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience ofreaders who prefer an English translation.

- 19 -