Summary of Financial Results for the First Quarter of Fiscal Year 2018
(Three Months Ended March 31, 2018)[Japanese GAAP]
April 27, 2018
Company name: SENSHUKAI CO.,LTD.
Stock exchange: Tokyo Stock Exchange, First Section
Stock code:
8165
URL: https://www.senshukai.co.jp
Representative:
Mr. Hiroyuki Hoshino, President and Representative Director
Inquiries:
Mr. Takeshi Naito, Director, Executive Officer, in charge of Corporate Planning
Tel: +81-6-6881-3220
Scheduled date of filing of Quarterly Report: May 14, 2018
Scheduled date of payment of dividend: Preparation of supplementary materials for quarterly financial results: None
Holding of quarterly financial results meeting: None
(All amounts are rounded down to the nearest millions of yen)

1. Consolidated Financial Results for the 1st Quarter of 2018 (January 1, 2018 – March 31, 2018)(1) Consolidated operating results (cumulative)(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%

1Q 2018
26,673(8.0)(1,454)
1Q 2017
28,992(5.3)(1,343)
Note: Comprehensive income (millions of yen) 1Q 2018: (1,975) (-%)

Millions of yen%-

Millions of yen%

Millions of yen%(1,393)(901)
1Q 2017: (798) (-%)

(1,565)(570)-

Net income per share

Diluted net income per share

Yen

Yen

(30.11)(10.97)-

1Q 2018
1Q 2017(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen

1Q 2018
91,332
46,572
Fiscal Year 2017
90,441
41,548Reference: Shareholders’ equity (millions of yen) 1Q 2018: 46,499

Net assets per share
%

Yen

50.9
45.9
Fiscal Year 2017: 41,473

759.16797.13

2. Dividends
1Q-endDividend per share
3Q-end2Q-endYen

Yen

Year-end

Yen

Total
Yen

Yen

Fiscal Year 2017
0.00
0.00
Fiscal Year 2018
Fiscal Year 2018 (forecasts)
0.00
Notes: 1. Revision to the most recently announced dividend forecast: None
2. Dividend forecast for the Fiscal Year 2018 has not been determined at this time.
3. 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.

0.00-

3. Consolidated Outlook for Fiscal Year 2018 (January 1, 2018 – December 31, 2018)(Percentages represent changes from the same period of the previous fiscal year)
Profit attributable to Net income
Operating profit
Ordinary profit
owners of parent
per share

Net sales
Millions of yen%

Millions of yen%

Millions of yen

124,000(1.6)
1,600
Full Year 2018
Note: Revision to the most recently announced consolidated outlook: None

1,900

%

Millions of yen

%

Yen

-

1,400

-

23.99

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): None
(2) Application of special accounting methods for presenting quarterly consolidated financial statements: Yes
Note: Please refer to “2. Quarterly Consolidated Financial Statements and Notes, (3) Notes to Quarterly Consolidated
Financial Statements (Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial
Statements)” on page 8 for further information.

(3) 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

(4) Number of shares outstanding (common shares)
1) Number of shares outstanding at the end of the period (including treasury shares)
1Q 2018:

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

201,588 shares

2) Number of treasury shares at the end of the period
1Q 2018:

201,724 shares

3) Average number of shares outstanding during the period
1Q 2018:

52,028,735 shares

1Q 2017:52,026,773 shares

Note: The Senshukai shares held by the trust that is recorded as treasury shares under shareholders’ equity is included in thenumber of treasury shares, and is deducted from the number of shares that is used to calculate the average number ofshares outstanding.
* This quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms.
* Cautionary statement with respect to forward-looking statements
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 page3, “1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecasts
and Other Forward-looking Statements.”(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 2018
Fiscal Year 2018 (forecasts)
15,178,083.00Note: Five shares of the Class A preferred stock were issued on March 30, 2018.

Class B preferred stock

1Q-end
Yen

Yen

Total
Yen

Yen

-

-

-

-

15,178,083.00

30,356,166.00

Dividend per share
3Q-end2Q-endYear-end

Yen

Year-end

Yen

Fiscal Year 2017
Fiscal Year 2018
Fiscal Year 2018 (forecasts)
Notes: 1. Nine shares of Class B preferred stock were issued on March 30, 2018.
2. There are no dividends for Class B preferred stock even when there is a dividend of surplus.

Total
Yen

Yen

-

-

-

-

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

Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance2(1) Explanation of Results of Operations

2(2) Explanation of Financial Position

3(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements

3

2. Quarterly Consolidated Financial Statements and Notes

4(1) Quarterly Consolidated Balance Sheet

4(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income6

Quarterly Consolidated Statement of Income(For the Three-month Period)

6

Quarterly Consolidated Statement of Comprehensive Income(For the Three-month Period)7(3) Notes to Quarterly Consolidated Financial Statements

8(Going Concern Assumption)

8(Significant Changes in Shareholders’ Equity)

8(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements)

8(Segment Information)

9

3. Other

9

Important Information about Going Concern Assumption-1-

9

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

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first quarter (January 1 to March 31) of 2018, the Japanese economy recovered slowly with the support ofhigher corporate earnings and an improvement in the employment situation due to the government’s economic andmonetary policies. In Japan’s retail industry, consumers remained budget-minded and price conscious, taking adefensive stance toward spending. In addition, there is heated competition with other retailers as well ascompanies in other industries. There is also a risk of higher prices for raw materials and distribution. As a result,the operating environment remained challenging.
Net sales in the first quarter decreased 8.0% year-over-year to 26,673 million yen because sales in the mail-orderbusiness have been sluggish.
Operating loss was 1,454 million yen compared with operating loss of 1,343 million yen in the same period of2017 despite measures to reduce all categories of selling, general and administrative expenses.
There was an ordinary loss of 1,393 million yen compared with ordinary loss of 901 million yen in the same
period of 2017. The loss attributable to owners of parent was 1,565 million yen compared with a loss of 570
million yen in the same period of 2017.
Overview by segment(Mail-order Business)
Consolidated sales in the mail-order business, centered on the catalog and the Internet businesses, decreased
12.0% year-over-year to 21,303 million yen in the first quarter. There was an operating loss of 1,318 million yen
compared with a loss of 1,275 million yen in the same period of 2017.
(Bridal Business)
Consolidated sales in the bridal business, centered on the house wedding business, increased 4.2% year-over-year
to 3,680 million yen. There was an operating loss of 247 million yen compared with a loss of 178 million yen in
the same period of 2017.
(Corporates Business)
Consolidated sales in the corporates business, which provides products and services to corporations, increased
11.9% year-over-year to 1,142 million yen, and operating income decreased 44.9 % to 73 million yen.
(Others)
Consolidated sales in other businesses, which consist of services (primarily childcare support, insurance andcredit card services), increased 126.9% year-over-year to 546 million yen because of the July 2017 acquisition of
Huit Laboratories, Inc. which manufactures and sells cosmetics. There was an operating profit of 37 million yen
compared with a loss of 22 million yen in the same period of 2017.

-2-

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

(2) Explanation of Financial Position(Balance sheet position)
Assets totaled 91,332 million yen at the end of the first quarter of 2018, an increase of 891 million yen from theend of 2017.
Current assets increased 1,033 million yen to 49,888 million yen. The main factors were increases of 1,866
million yen in cash and deposits and 370 million yen in merchandise and finished goods, while there was adecrease of 1,189 million yen in accounts receivable-other. Non-current assets decreased 142 million yen to41,444 million yen. The factors include decreases of 95 million yen in property, plant and equipment, 4 million
yen in intangible assets, and 42 million yen in investments and other assets.
Current liabilities decreased 3,577 million yen to 26,489 million yen. The main factors were decreases of 2,342
million yen in other and 1,276 million yen in electronically recorded obligations-operating. Non-current liabilities
decreased 555 million yen to 18,270 million yen. The main factor was a decrease of 413 million yen in long-termloans payable.
Net assets increased 5,024 million yen to 46,572 million yen. While there was a decrease of 1,565 million yen inretained earnings because of the loss attributable to owners of parent, main factors include an increase of 3,500
million yen each in capital stock and capital surplus because of the March 2018 sale of newly issued preferredstock through a third-party allotment to Regional Economy Vitalization Corporation of Japan, which is managed
by REVIC Partners Co., Ltd. as the unlimited liability partner. In accordance with the provisions of Article 452 of
the Companies Act, to offset negative retained earnings, the capital surplus decreased by 7,071 million yen andretained earnings were increased by the same amount. As a result, the equity ratio was 50.9% at the end of the firstquarter.
(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements
Senshukai currently maintains its consolidated forecasts for 2018 that was released on February 8, 2018.

-3-

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

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Millions of yen)
1Q 2018(As of Mar. 31, 2018)

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

17,32819,194

Notes and accounts receivable-trade

5,481

5,141

Merchandise and finished goods

16,561

16,931

Accounts receivable-other

7,216

6,026

Other

2,413

2,733

(147)

(139)

48,85449,888

Buildings and structures, net

13,716

13,496Land

10,451

10,338848

1,086

25,01624,921

1,992

1,928

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other

715

775

2,708

2,703

Investment securities

7,630

7,678

Other

6,497

6,406

Total intangible assets
Investments and other assets

Allowance for doubtful accounts

(265)

(265)

Total investments and other assets

13,861

13,81941,58641,44490,441

91,332

Total non-current assets
Total assets-4-

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

(Millions of yen)
1Q 2018(As of Mar. 31, 2018)

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

9,406

8,129

Accounts payable-trade

6,123

5,987

Short-term loans payable

1,416

1,577

222

104

Income taxes payable
Provision for sales promotion expenses

408

369

Provision for bonuses

581

756

Other

11,907

9,565

Total current liabilities

30,06626,489Non-current liabilities
Bonds with subscription rights to shares

5,000

5,000

Long-term loans payable

10,613

10,19981

85

Net defined benefit liability
Provision for management board incentive plan trust
Other
Total non-current liabilities

7

7

3,124

2,978

18,826

18,27048,892

44,760Capital stock

22,30425,804

Total liabilities
Net assets
Shareholders’ equity
Capital surplus

23,86020,288Retained earnings(4,859)724

Treasury shares

(149)

(150)

41,15546,667

1,216

1,024

219

7

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)(1,134)Foreign currency translation adjustment

(40)

(46)

Remeasurements of defined benefit plans

(19)

(19)

Total accumulated other comprehensive income

318

(168)

74

73

41,54846,57290,441

91,332

Non-controlling interests
Total net assets
Total liabilities and net assets-5-

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

(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income(Quarterly Consolidated Statement of Income)(For the Three-month Period)

Net sales
Cost of sales
Gross profit
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
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commission fee
Other
Total non-operating expenses
Ordinary loss
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Subsidy income
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Loss on reduction of non-current assets
Impairment loss
Other
Total extraordinary losses
Loss before income taxes
Income taxes
Loss
Loss attributable to non-controlling interests
Loss attributable to owners of parent

1Q 2017(Jan. 1, 2017 – Mar. 31, 2017)
28,992
15,922
13,07014,413(1,343)(Millions of yen)
1Q 2018(Jan. 1, 2018 – Mar. 31, 2018)
26,67315,083
11,58913,044(1,454)

6
5

8
4

428

263

65
28
534

46
70
393

38
25
28
92
(901)

39
254
38
332
(1,393)

18
18

0
21
21

3
18
10
32
(915)
(336)
(578)
(7)
(570)

0
115
19
134
(1,506)60(1,566)(0)(1,565)-6-

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

(Quarterly Consolidated Statement of Comprehensive Income)(For the Three-month Period)
1Q 2017(Jan. 1, 2017 – Mar. 31, 2017)
Loss(Millions of yen)
1Q 2018(Jan. 1, 2018 – Mar. 31, 2018)(578)(1,566)

Valuation difference on available-for-sale securities

(96)

(192)

Deferred gains or losses on hedges

(304)

(212)

(9)

(5)

190

1

(220)

(409)

(798)

(1,975)(790)(1,974)(7)(0)

Other comprehensive income

Foreign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests-7-

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

(3) Notes to Quarterly Consolidated Financial Statements(Going Concern Assumption)
Not applicable.
(Significant Changes in Shareholders’ Equity)
At the annual general meeting of shareholders on March 29, 2018, shareholders approved a resolution to eliminate
the retained earnings deficit. This was accomplished by first reducing the legal capital surplus by 14,809 million
yen and transferring this amount to other capital surplus, in accordance with Article 448, Clause 1 of theCompanies Act. Next, in accordance with Article 452 of the Companies Act, other capital surplus was decreased
by 7,071 million yen and this amount was transferred to retained earnings brought forward. This process
decreased the capital surplus by 7,071 million yen in the first quarter of 2018.
At the same meeting, shareholders approved a resolution to issue preferred stock (Class A and Class B) for salethrough a third-party allotment. Senshukai subsequently issued five shares of Class A preferred stock and nine
shares of Class B preferred stock with a payment date of March 30, 2018. The issuance of this preferred stock
resulted in increases of 3,500 million yen each in capital stock and capital surplus.
The result of all these measures was capital stock of 25,804 million yen and legal capital surplus of 20,288 million
yen at the end of the first quarter of 2018.
(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements)(Calculation of tax expense)
The tax expenses are calculated by first reasonably estimating the effective tax rate after the application of tax
effect accounting with respect to profit before income taxes for the fiscal year in which the quarter under review
falls, and multiplying that rate by the profit before income taxes for the quarter under review. However,Senshukai uses legally stipulated effective tax rates to calculate tax expenses for cases in which using estimatedtax rates gives a noticeably irrational result.

-8-

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

(Segment Information)
I 1Q 2017 (Jan. 1, 2017 – Mar. 31, 2017)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment

Net sales
Sales to customers
Inter-segment sales
or transfers
Total
Segment profit (loss)

Corporates
Sub-total
business

Others(Note 1)

Total

(Millions of yen)Amounts shown on
Adjustment quarterly consolidated
statement of income(Note 2)
(Note 3)Mail-orderbusiness

Bridalbusiness

24,196

3,533

1,021

28,751

240

28,992-

28,992

217

0

37

254

0

254

(254)

-

24,413

3,533

1,058

29,006240

29,247(254)

28,992(1,275)

(178)

133

(1,320)(22)(1,343)0(1,343)

Notes: 1. Others represent the businesses which are not included in any of the three reportable segments and consist of theservices business primarily offering insurance and credit card services, and childcare business.
2. The 0 million yen adjustment to segment profit (loss) comprises elimination for inter-segment transactions.
3. Segment profit (loss) is adjusted to be consistent with operating loss shown on the quarterly consolidated statementof income.

2. Information related to impairment of non-current assets, goodwill, etc. for each reportable segment
No major events or changes occurred.
II 1Q 2018 (Jan. 1, 2018 – Mar. 31, 2018)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment

Net sales
Sales to customers
Inter-segment sales
or transfers
Total
Segment profit (loss)(Millions of yen)Amounts shown on
Adjustment quarterly consolidated(Note 2)statement of income(Note 3)Mail-orderbusiness

Bridalbusiness

Corporates
business

Sub-total

Others(Note 1)

21,303

3,680

1,142

26,126546

26,673-

26,673

209

-

45

255

1

256

(256)

-

21,513

3,680

1,188

26,381547

26,929(256)

26,673(1,318)(247)

73(1,492)37(1,454)0(1,454)

Total

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. The 0 million yen adjustment to segment profit (loss) is an elimination for inter-segment transactions.
3. Segment profit (loss) is adjusted to be consistent with the operating loss on the quarterly consolidated statement ofincome.

2. Information related to impairment of non-current assets, goodwill, etc. for each reportable segment
No major events or changes occurred.
3. Other
Important Information about Going Concern Assumption
In 2017, the Senshukai Group had an operating loss of 4,287 million yen and a loss attributable to owners ofparent of 11,090 million yen. This performance creates significant doubts about the going concern assumption. To
eliminate these doubts and quickly improve results of operations, Senshukai has implemented a medium-term
management plan for 2018 to 2020, which was announced on October 27, 2017. In addition, there were structuralreforms during 2017 that included a voluntary retirement program and adjusting the size of core subsidiaries inorder to streamline business operations. There will be even more activities in 2018 to restore profitability andbuild a stronger foundation for business operations. One goal is improving mail-order business profitability bydownsizing unprofitable product categories. We are also reexamining the procurement strategy, implementing
timely discounts and taking other steps to increase the gross profit margin. In addition, we are working onlowering catalog and sales promotion expenses and using these expenditures more efficiently. To do this, we are-9-SENSHUKAI CO.,LTD. (8165) Financial Results for the First Quarter Fiscal Year 2018

conducting a complete reexamination of our strategies for distributing catalogs and for price discounts and points
awarded for purchases.
The Senshukai Group recorded an operating loss of 1,454 million yen and a loss attributable to owners of parentof 1,565 million yen in the first quarter. However, due to the seasonal nature of business activities, sales andearnings are usually lower in the first quarter of every year than in the other quarters. There are no significant
concerns at this time about cash flows because cash and deposits were 19,194 million yen at the end of the firstquarter and working capital is sufficient to support business operations for the time being.
For these reasons, we believe there are no significant uncertainties regarding the going concern assumption.

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

- 10 -