Summary of Financial Results for the Second Quarter of Fiscal Year 2018
(Six Months Ended June 30, 2018)[Japanese GAAP]
July 26, 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: August 9, 2018
Scheduled date of payment of dividend: Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results meeting: Yes (for institutional investors and analysts)(All amounts are rounded down to the nearest millions of yen)

1. Consolidated Financial Results for the 2nd Quarter of 2018 (January 1, 2018 – June 30, 2018)(1) Consolidated operating results (cumulative)
Net sales
Millions of yen(Percentages represent changes from the same period of the previous fiscal year)
Profit attributable toOperating profit
Ordinary profit
owners of parent
Millions of yen%

2Q 2018
57,199(9.5)(1,138)
2Q 2017
63,186(4.1)(1,248)
Note: Comprehensive income (millions of yen) 2Q 2018: (1,588) (-%)%-

Millions of yen

Net income per share

Diluted net income per share

Yen

Yen

(25.08)(119.34)-

2Q 2018
2Q 2017%

Millions of yen%(1,153)(6,208)

-

(993)
(849)
2Q 2017: (6,213) (-%)

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen

2Q 2018
81,54940,175
Fiscal Year 2017
90,441
41,548Reference: Shareholders’ equity (millions of yen) 2Q 2018: 40,099

Net assets per share
%

Yen

49.2
45.9
Fiscal Year 2017: 41,473

822.34797.13

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
0.00
Fiscal Year 2018 (forecasts)
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%

Millions of yen%

Yen

119,000
(5.6)
300
400
200
1.09
Full Year 2018
Note: Revision to the most recently announced consolidated outlook: Yes
For more information, please refer to “Notice of Revisions to Consolidated Outlook” (Japanese version only) that was announced
today (July 26, 2018).

* 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, (4) Notes to Quarterly Consolidated
Financial Statements (Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial
Statements)” on page 9 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)
2Q 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
2Q 2018:

12,042,598 shares

3) Average number of shares outstanding during the period
2Q 2018:

48,038,135 shares

2Q 2017:52,027,261 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
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 page3, “1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecasts
and Other Forward-looking Statements.”
How to view supplementary information at the financial results meeting
Senshukai plans to hold a financial results meeting for institutional investors and analysts on July 27, 2018. Materials to be
distributed at the meeting 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 201815,178,083.00Fiscal Year 2018 (forecasts)
Note: 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 Second 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 Six-month Period)

6

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

7(3) Quarterly Consolidated Statement of Cash Flows

8(4) Notes to Quarterly Consolidated Financial Statements

9(Going Concern Assumption)

9(Significant Changes in Shareholders’ Equity)

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

9(Segment Information)

9

3. Other

10

Important Information about Going Concern Assumption

-1-

10

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

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the cumulative second quarter (January 1 to June 30) of 2018, the Japanese economy recovered slowly with thesupport of improvements in the employment situation, personal income and corporate earnings. However, theoutlook remains uncertain in part because of concerns about how increasing trade friction will affect the global
economy.
In Japan’s retail industry, consumer sentiment is weak as people continue to be budget-minded and to seek low
prices. In addition, the market for used merchandise is growing, including the C-to-C sector of this market. As aresult, there is increasingly heated competition in the retail industry that includes competition with companies inother industries.
Net sales in the cumulative second quarter decreased 9.5% year-over-year to 57,199 million yen because sales in
the mail-order business have been sluggish.
There was an operating loss of 1,138 million yen compared with a loss of 1,248 million yen in the same period of
2017. There were measures to lower all categories of selling, general and administrative expenses, but the cost of
sales ratio increased due to a decrease in the gross profit caused by lower sales and to sales of merchandise at
reduced prices. There was an ordinary loss of 993 million yen compared with a loss of 849 million yen in thesame period of 2017. The loss attributable to owners of parent was 1,153 million yen compared with a loss of
6,208 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
14.1% year-over-year to 44,779 million yen in the cumulative second quarter. There was an operating loss of
1,626 million yen compared with a loss of 1,610 million yen in the same period of 2017.
(Bridal Business)
Consolidated sales in the bridal business, centered on the house wedding business, increased 8.3% year-over-year
to 8,880 million yen. Operating profit increased 138.0% year-over-year to 312 million yen.
(Corporates Business)
Consolidated sales in the corporates business, which provides products and services to corporations, increased
8.5% year-over-year to 2,463 million yen, and operating profit decreased 26.1% year-over-year to 164 million
yen.
(Others)
Consolidated sales in other businesses, which consist of services (primarily childcare support, insurance andcredit card services), increased 88.8% year-over-year to 1,075 million yen because of the July 2017 acquisition of
Huit Laboratories, Inc. which manufactures and sells cosmetics. Operating profit increased 40.4% year-over-year
to 10 million yen.

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

(2) Explanation of Financial Position(Balance sheet position)
Assets totaled 81,549 million yen at the end of the second quarter of 2018, a decrease of 8,891 million yen fromthe end of 2017.
Current assets decreased 8,071 million yen to 40,782 million yen. The main factors were decreases of 3,923
million yen in cash and deposits, 1,780 million yen in accounts receivable-other and 1,211 million yen inmerchandise and finished goods. Non-current assets decreased 819 million yen to 40,766 million yen. The factors
include decreases of 330 million yen in property, plant and equipment, 36 million yen in intangible assets, and452 million yen in investments and other assets.
Current liabilities decreased 1,654 million yen to 28,412 million yen. The main factors were decreases of 3,624
million yen in other, 1,629 million yen in accounts payable-trade, and 1,296 million yen in electronically recorded
obligations-operating, while there was an increase of 5,000 million yen in current portion of bonds with shareacquisition rights. Non-current liabilities decreased 5,863 million yen to 12,962 million yen. The main factor wasa decrease of 5,000 million yen in bonds with share acquisition rights.
Net assets decreased 1,373 million yen to 40,175 million yen. The main factors 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 5,995 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 amount to other capital surplus on April 2018. Furthermore, in accordancewith the provisions of Article 452 of the Companies Act, to eliminate the retained earnings deficit, the capitalsurplus decreased by 7,071 million yen and retained earnings were increased by the same amount. As a result, theequity ratio was 49.2%.
(Cash flow position)
The balance of cash and cash equivalents at the end of the second quarter of 2018 was 13,400 million yen, adecrease of 3,923 million yen from the end of 2017.
Operating activities used net cash of 3,322 million yen (net cash provided of 1,296 million yen in the same periodof 2017). The main cash inflows were a decrease in other current assets of 2,037 million yen and a decrease ininventories of 1,207 million yen. The main cash outflows include a decrease in notes and accounts payable-tradeof 2,728 million yen, a decrease in other current liabilities of 1,972 million yen and payments for businessstructure reform expenses of 1,902 million yen.
Investing activities used net cash of 29 million yen (net cash used of 761 million yen in the same period of 2017).
The main cash inflows include other proceeds of 474 million yen. The main cash outflows include 582 million
yen for the purchase of property, plant and equipment.
Financing activities used net cash of 493 million yen (net cash used of 387 million yen in the same period of2017). The main cash inflows include the proceeds from issuance of common shares of 6,975 million yen. The
main cash outflows were 6,784 million yen for the purchase of treasury shares and 616 million yen for the
repayments of long-term loans payable.
(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements
Senshukai has revised its consolidated outlook that was released on February 8, 2018. For more information,please refer to “Notice of Revisions to Consolidated Outlook” (Japanese version only) that was announced today(July 26, 2018).

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

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Millions of yen)
2Q 2018(As of Jun. 30, 2018)

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

17,32813,404

Notes and accounts receivable-trade

5,481

4,821

Merchandise and finished goods

16,561

15,350Accounts receivable-other

7,216

5,436

Other

2,413

1,902

(147)

(131)

48,85440,782

Buildings and structures, net

13,716

13,296Land

10,451

10,338848

1,050

25,016

24,686

1,992

1,864

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

807

2,708

2,672

Investment securities

7,630

7,393

Other

6,497

6,234

Total intangible assets
Investments and other assets

Allowance for doubtful accounts

(265)

(218)

Total investments and other assets

13,861

13,40841,586

40,76690,44181,549Total non-current assets
Total assets-4-

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

(Millions of yen)
2Q 2018(As of Jun. 30, 2018)

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

9,406

8,109

Accounts payable-trade

6,123

4,493

Short-term loans payable

1,416

1,494

-

5,000

Income taxes payable

222

243

Provision for sales promotion expenses

408

349

Provision for bonuses

581

437

Current portion of bonds with share acquisition rights

Other

11,907

8,283

Total current liabilities

30,06628,412

Bonds with share acquisition rights

5,000

-

Long-term loans payable

10,613

9,909

Net defined benefit liability

81

88

Provision for management board incentive plan trust

7

7

Non-current liabilities

Other

3,124

2,957

Total non-current liabilities

18,826

12,962

48,892

41,374

Total liabilities
Net assets
Shareholders’ equity
Capital stock

22,30422,304

Capital surplus

23,86023,788Retained earnings(4,859)1,135

Treasury shares(149)(6,934)

41,15540,294

1,216

1,031

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

219

19

(1,056)(1,134)

(40)

(62)

Remeasurements of defined benefit plans

(19)

(49)

Total accumulated other comprehensive income

318

(195)

74

76

41,54840,17590,44181,549Non-controlling interests
Total net assets
Total liabilities and net assets-5-

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

(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income(Quarterly Consolidated Statement of Income)(For the Six-month Period)
2Q 2017(Jan. 1, 2017 – Jun. 30, 2017)(Millions of yen)
2Q 2018(Jan. 1, 2018 – Jun. 30, 2018)

Net sales

63,18657,199

Cost of sales

34,212

31,357Gross profit

28,97325,842

Selling, general and administrative expenses

30,222

26,981

Operating loss

(1,248)(1,138)Interest income

1215

Dividend income
Share of profit of entities accounted for using equity
methodGain on adjustment of account payable

70

41

249

144

145

130

Other

65

215

Total non-operating income

543

547

Non-operating income

Non-operating expenses
Interest expenses

77

76

Commission fee

31

265

Other

35

59

Total non-operating expenses

143

401

(849)

(993)

Gain on sales of non-current assets-

0Gain on sales of investment securities

290

171

Subsidy income

210

46

Total extraordinary income

500

218

6

0

Ordinary loss
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

198

46

4,442

157

-

27

4,647

231

(4,997)(1,006)

Income taxes

1,217

145

Loss

(6,214)(1,152)(5)

1(6,208)(1,153)

Profit (loss) attributable to non-controlling interests
Loss attributable to owners of parent-6-

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

(Quarterly Consolidated Statement of Comprehensive Income)(For the Six-month Period)
2Q 2017(Jan. 1, 2017 – Jun. 30, 2017)
Loss(Millions of yen)
2Q 2018(Jan. 1, 2018 – Jun. 30, 2018)(6,214)(1,152)

20

(184)

(273)

(182)

(8)

(9)

261

(59)

0

(436)

(6,213)(1,588)(6,208)(1,589)(5)

1

Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
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 Second Quarter Fiscal Year 2018(3) Quarterly Consolidated Statement of Cash Flows(Millions of yen)
2Q 2017
2Q 2018(Jan. 1, 2017 – Jun. 30, 2017) (Jan. 1, 2018 – Jun. 30, 2018)
Cash flows from operating activities
Loss before income taxes
Depreciation
Impairment loss
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for sales promotion expenses
Interest and dividend income
Interest expenses
Share of (profit) loss of entities accounted for using equity method
Loss (gain) on sales and retirement of non-current assets
Loss on reduction of non-current assets
Loss (gain) on sales of investment securities
Subsidy income
Decrease (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(4,997)
1,245
4,442
(15)
19
(83)
77
(249)
6
198
(290)
(210)
(250)
1,621
2,827
(1,224)(1,467)(53)(1,006)
899
157
(62)
(144)
(58)
(56)
76
(144)
0
46
(171)
(46)
657
1,207
2,037
(2,728)(1,972)(20)

Subtotal

1,597(1,331)

Interest and dividend income received
Interest expenses paid
Income taxes paid
Payments for business structure reform expenses

100
(77)
(323)
-

73
(73)
(88)
(1,902)

Net cash provided by (used in) operating activities

1,296(3,322)

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
Purchase of investment securities
Proceeds from sales of investment securities
Other, net

(505)
(456)
210
(100)
765
(674)

(582)
0
(191)
46
(98)
321
474

Net cash provided by (used in) investing activities

(761)

(29)

40
2,800
(956)
(2,000)
(208)
(61)

(10)
(616)
6,975
(6,784)
(1)
(56)

(387)

(493)

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

(5)

(78)

Net increase (decrease) in cash and cash equivalents

143(3,923)

Cash and cash equivalents at beginning of period

16,60017,323

Cash and cash equivalents at end of period

16,743

13,400-8-

SENSHUKAI CO.,LTD. (8165) Financial Results for the Second 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 and increased the retained earnings by 7,071 million yen in the
cumulative second 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 and transfer the amount credited to capital stock and capital surplus for these
preferred stock to other capital surplus. Senshukai subsequently issued five shares of Class A preferred stock andnine shares of Class B preferred stock with a payment date of March 30, 2018. The issuance of this preferredstock resulted in increases of 3,500 million yen each in capital stock and legal capital surplus. Based on Article
447, Clause 1 and Article 448, Clause 1 of the Companies Act, Senshukai then reduced capital stock and legal
capital surplus by 3,500 million yen each and transferred these amounts to other capital surplus on April 13, 2018.
Consequently, the capital surplus increased 7,000 million yen in the cumulative second quarter of 2018.
On April 27, 2018, the Board of Directors approved a resolution to terminate the equity and business alliance with
J.FRONT RETAILING Co., Ltd. and to purchase treasury shares in accordance with Article 156 of the Companies
Act as applied based on Article 165, Clause 3 of this act. Based on this authorization, Senshukai repurchased
11,840,800 shares of its stock on May 1, 2018, resulting in an increase of 6,784 million yen in treasury shares
during the cumulative second quarter of 2018. The result of all these measures was capital stock of 22,304 million
yen, legal capital surplus of 23,788 million yen, retained earnings of 1,135 million yen and treasury shares of
6,934 million yen at the end of the second 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.
(Segment Information)
I 2Q 2017 (Jan. 1, 2017 – Jun. 30, 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

52,145

8,201

2,270

62,616569

63,186-

63,186

475

0

61

537

16

554

(554)

-

52,620

8,202

2,331

63,154586

63,740(554)

63,186(1,610)131

222(1,256)

7(1,249)0(1,248)Notes: 1. Others represent the businesses which are not included in any of the three reportable segments and consist of theservices business, which is primarily the insurance and credit card services, and childcare business.

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

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(Significant impairment losses related to non-current assets)
In the mail-order business, an asset impairment loss was recorded to write down the book value of some assets
to the amount that can be recovered in order because the performance of this segment has been well below theplan. This impairment loss was 4,441 million yen in 2Q 2017.
II 2Q 2018 (Jan. 1, 2018 – Jun. 30, 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
statement of income(Note 2)
(Note 3)Mail-orderbusiness

Bridalbusiness

Corporates
business

Sub-total

Others(Note 1)

44,779

8,880

2,463

56,124

1,075

57,199-57,199

462

0

87

550

34

584

(584)

-

45,241

8,880

2,551

56,674

1,109

57,783(584)

57,199(1,626)312

164(1,148)10(1,138)0(1,138)

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 to restore profitability and build astronger 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 areconducting a complete reexamination of our strategies for distributing catalogs and for price discounts and points
awarded for purchases.
There are no significant concerns at this time about cash flows because cash and deposits were 13,404 million yen
in the cumulative second quarter 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.

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