Summary of Financial Results for the Second Quarter of Fiscal Year 2022
(Six Months Ended June 30, 2022)[Japanese GAAP]
August 10, 2022

Company name: SENSHUKAI CO.,LTD.

Stock exchange: Tokyo Stock Exchange
Stock code:
8165
URL: https://www.senshukai.co.jp
Representative:
Mr. Kenji Kajiwara, President and Representative Director
Inquiries:
Mr. Tetsuya Takahashi, Director, General Manager, Corporates Headquarters
Tel: +81-6-6881-3220
Scheduled date of filing of Quarterly Report: August 12, 2022
Scheduled date of payment of dividend: Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results meeting: Yes (Only a webcast is planned to prevent the spread of COVID-19)(All amounts are rounded down to the nearest millions of yen)

1. Consolidated Financial Results for the 2nd Quarter of 2022 (January 1, 2022 – June 30, 2022)(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%

2Q 2022
28,389(3,908)
2Q 202137,905 (10.2)
473
Note: Comprehensive income (millions of yen) 2Q 2022: (3,239) (-%)

Millions of yen%-

Millions of yen%

Millions of yen%(3,749)499
2Q 2021: 911 (-%)

(3,656)478-

Net income per share

Diluted net income per share

Yen

Yen

2Q 2022(77.99)2Q 2021
10.41
Note: Beginning with the first quarter of 2022, Senshukai has applied Accounting Standard for Revenue Recognition (AccountingStandards Board of Japan (ASBJ) Statement No. 29, March 31, 2020). All figures for the second quarter of 2022 incorporate
this accounting standard and comparisons with the second quarter of the previous fiscal year are omitted.

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen

Net assets per share%Yen

2Q 202246,85429,81863.6
635.63Fiscal Year 2021
52,47633,20263.3
708.09Reference: Shareholders’ equity (millions of yen) 2Q 2022: 29,787
Fiscal Year 2021: 33,202
Note: Beginning with the first quarter of 2022, Senshukai has applied Accounting Standard for Revenue Recognition (ASBJ
Statement No. 29, March 31, 2020). All figures for the second quarter of 2022 incorporate this accounting standard.

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

Yen

Fiscal Year 2021
3.00
Fiscal Year 2022
0.00
Fiscal Year 2022 (forecasts)
Note: Revision to the most recently announced dividend forecast: None

Year-end

Total

Yen

Yen

Yen

-

4.00

7.00

-

0.00

0.00

3. Consolidated Outlook for Fiscal Year 2022 (January 1, 2022 – December 31, 2022)
Net sales
Millions of yen(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% Millions of yen% Millions of yen

Full Year 2022
68,000 (7.0)(4,200) (4,100)
Note: Revision to the most recently announced consolidated outlook: None

% Millions of yen

%

Yen

-

-

(85.31)(4,000)* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): Yes
Newly added: 2 (Senshukai Make Co- Inc., WellServe Co., Ltd.) Excluded: 1 (Huit laboratories, Inc.)
Note: Please refer to “2. Quarterly Consolidated Financial Statements and Notes, (4) Notes to Quarterly Consolidated
Financial Statements (Changes in Significant Subsidiaries during the Period)” on page 10 for further information.

(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 10 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: Yes
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None
Note: Please refer to “2. Quarterly Consolidated Financial Statements and Notes, (4) Notes to Quarterly Consolidated
Financial Statements (Changes in Accounting Policies)” on page 10 for further information.

(4) Number of shares outstanding (common shares)
1) Number of shares outstanding at the end of the period (including treasury shares)
2Q 2022:52,056,993 sharesFiscal Year 2021:

52,056,993 sharesFiscal Year 2021:

5,167,335 shares

2Q 2021:45,983,955 shares

2) Number of treasury shares at the end of the period
2Q 2022:

5,193,926 shares

3) Average number of shares outstanding during the period
2Q 2022:46,878,733 shares* 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 page4, “1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecasts andOther Forward-looking Statements.”
How to view supplementary information at the financial results meeting
There will be no meeting for the presentation of the financial results for the second quarter of 202 2 because of the COVID-19
pandemic. A video of this presentation is planned to be posted on the Senshukai website soon. In addition, materials used forthis presentation will be disclosed using the Timely Disclosure network (TDnet) and will be posted on the Senshukai website.

SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

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

4

2. Quarterly Consolidated Financial Statements and Notes

5(1) Quarterly Consolidated Balance Sheet

5(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income7

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

7

Quarterly Consolidated Statement of Comprehensive Income(For the Six-month Period)8(3) Quarterly Consolidated Statement of Cash Flows

9(4) Notes to Quarterly Consolidated Financial Statements

10(Going Concern Assumption)

10(Significant Changes in Shareholders’ Equity)

10(Changes in Significant Subsidiaries during the Period)

10(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements) 10(Changes in Accounting Policies)

10(Additional Information)

11(Segment Information)

13

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SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
Beginning with the first quarter of 2022, Senshukai has applied Accounting Standard for Revenue Recognition(ASBJ Statement No. 29, March 31, 2020). As a result, the explanation of results of operations for the first half of2022 does not show the amount of increase or decrease compared with the same period of 2021.
In the first half (January 1 to June 30) of 2022, restrictions on various activities were eased in Japan as the severityof the pandemic declined. Despite this improvement, the outlook for the Japanese economy remains unclear because
of increasing geopolitical risk caused by the Ukraine crisis and other events, rising U.S. interest rates, exchange rate
volatility, and inflation that includes a sharp rise in the cost of raw materials.
In January 2022, the replacement of the core IT system was completed as planned. Replacement activities included
revisions and business process reengineering for systems and business processes that had become complicated. The
purpose is to better enable Senshukai to adapt to a variety of changes in the business climate. Although a long timeand many measures were used to prepare for the new IT system, there were problems after the system became
operational. For example, some orders were not properly received and some merchandise could not be delivered onschedule. Furthermore, the impact of these problems broadened for several reasons, including a large volume ofcalls at the call center, and it became difficult to conduct normal business oper ations. The new system is currently
operating properly. However, sales at Belle Maison business in the core mail-order and online shopping businesshave been far below the level of the same period of 2021. Furthermore, first quarter sales in 2021 include s ales ofthe bridal business, which was subsequently excluded from the consolidated financial statements. As a result, net
sales in the first half of 2022 were 28,389 million yen (compared with 37,905 million yen in the first half of 2021),
operating loss was 3,908 million yen (compared with a profit of 473 million yen in the first half of 2021), andordinary loss was 3,749 million yen (compared with a profit of 499 million yen in the first half of 2021). Loss
attributable to owners of parent was 3,656 million yen (compared with a profit of 478 million yen in the first half of2021).
Business segment performance was as follows.
Consolidated subsidiaries Dears Brain Inc. and PLANETWORK CO., LTD., and WONDERSTAG E Co., Ltd., awholly owned subsidiary of Dears Brain and a sub-subsidiary of Senshukai, were excluded from the scope of
consolidation following the sales of all shares of Dears Brain and PLANETWORK on March 31, 2021 . As a result,
the Senshukai Group no longer operates a bridal business. Consequently, there is no longer business segment
information for the bridal business beginning with the first quarter of 2022.
(Mail-order and Online Shopping Business)
Consolidated sales in the mail-order and online shopping business, which is primarily the catalog and the Internet
businesses, was 25,145 million yen in the first half of 2022 compared with 32,842 million yen in the first half of2021. There was an operating loss of 4,042 million yen compared with a profit of 1,331 million yen in the first halfof 2021.
There were problems involving the launch of the new core IT system following the completion of the replacementof the previous system in January 2022. To deal with these problems, marketing activities were suspended and thelevel of normal business activities was reduced in order to focus on handling inquiries from customers during thefirst half. For a recovery of sales, marketing activities resumed in March after IT system operations returned tonormal. As sales activities increased, there were other measures for a recovery of the performance of this business.
Despite these measures, more time will be needed for the number of members to return to the prior-year level andsales of Bell Maison, the core business of this segment, were far below sales one year earlier, resulting in lower
segment sales and earnings.
(Corporates Business)
Consolidated sales in the corporates business, which provides products and services to corporations, were 2,217
million yen compared with 2,239 million yen in the first half of 2021. Operating profit was 107 million yen comparedwith a profit of 203 million yen in the first half of 2021.

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SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

Although the performance of the direct mail services category was strong, first half sales and earnings decreased
because of lower than expected utilization of outsourced logistics and call center services.
(Insurance Business)
This business provides support, mainly to Belle Maison members, for choosing the most suitable insurance policies.
Consolidated sales were 214 million yen compared with 174 million yen in the first half of 2021 and operating profit
was 97 million yen compared with a profit of 59 million yen in the first half of 2021.
(Others)
Consolidated sales in other businesses, which include the childcare support business and manufacturing and salesof cosmetics, were 811 million yen compared with 916 million yen in the first half of 2021. Operating loss was 70
million yen compared with a loss of 77 million yen in the first half of 2021. The manufacturing and sales of cosmetics
business was excluded from the scope of consolidation following the sales of all shares of Huit laboratories, Inc.,
which was a consolidated subsidiary of Senshukai, on April 1, 2022. For more information, refer to the “Notice of
Change in Consolidated Subsidiaries (Transfer of Shares)” released on March 4, 2022 (Japanese version only).
(2) Explanation of Financial Position(Balance sheet position)
Assets totaled 46,854 million yen at the end of the second quarter of 2022, a decrease of 5,622 million yen from theend of 2021.
Current assets decreased 5,305 million yen to 29,158 million yen. The factors included decreases of 3,787 million
yen in cash and deposits and 1,471 million yen in accounts receivable-other. Non-current assets decreased 317
million yen to 17,696 million yen. The factors included decreases of 431 million yen in property, plant and equipment
and 145 million yen in investments and other assets, while there was an increase of 259 million yen in intangible
assets.
Current liabilities decreased 3,086 million yen to 12,880 million yen. The factors included decreases of 1,863 million
yen in other and 1,253 million yen in electronically recorded obligations-operating. Non-current liabilities increased
847 million yen to 4,155 million yen. The main factors included increases of 590 million yen in long-termborrowings and 258 million yen in other.
Net assets decreased 3,383 million yen to 29,818 million yen. The factors included booking of loss attributable toowners of parent of 3,656 million yen. As a result, the equity ratio was 63.6%.
(Cash flow position)
The balance of cash and cash equivalents at the end of the second quarter of 2022 was 11,878 million yen, a decreaseof 3,787 million yen from the end of 2021.
Operating activities used net cash of 4,079 million yen (net cash provided of 388 million yen in the same period of2021). The main cash inflows were a decrease in other current assets of 1,837 million yen. The main cash outflows
include loss before income taxes of 3,604 million yen, a decrease in other current liabilities of 1,914 million yen
and a decrease in trade payables of 1,500 million yen.
Investing activities used net cash of 273 million yen (net cash provided of 1,486 million yen in the same period of2021). The main cash inflows include proceeds from sales of shares of subsidiaries resulting in change in scope of
consolidation of 626 million yen. The main cash outflows include 1,166 million yen for the purchase of intangible
assets.
Financing activities provided net cash of 482 million yen (net cash used of 2,672 million yen in the same period of2021). The main cash inflows include proceeds from long-term borrowings of 1,000 million yen. The main cash
outflows were repayments of long-term borrowings of 340 million yen and dividends paid of 186 million yen.

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SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements
Senshukai currently maintains its consolidated forecasts for fiscal year 2022 (January 1, 2022 to December 31, 2022)
that was released on May 13, 2022. In response to problems that began after the January 2022 completion of thereplacement of the core IT system, Senshukai has suspended marketing activities and reduced the level of normal
business activities in order to place priority on handling inquiries from customers. Currently, marketing activities
have resumed, the volume of business activities is increasing and there are new actions for achieving a sales recovery.
The entire Senshukai Group is firmly committed to restoring the trust of customers and achieving a recovery in thevolume of orders. The forecast for 2022 reflects these issues and activities.

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SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Millions of yen)
2Q 2022(As of Jun. 30, 2022)

Fiscal Year 2021
(As of Dec. 31, 2021)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade, and contract
assetsMerchandise and finished goods

15,665

11,878

2,235

2,316

9,123

8,724

Accounts receivable-other

5,654

4,183

Other

1,911

2,158

Allowance for doubtful accounts

(126)

(102)

34,46329,158

Buildings and structures, net

4,076

3,866

Land

5,524

5,402

379

279

9,980

9,548

Other

4,204

4,464

Total intangible assets

4,204

4,464

Investment securities

2,493

2,478

Other

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

Other, net
Total property, plant and equipment
Intangible assets

Investments and other assets
1,425

1,277

Allowance for doubtful accounts

(90)

(73)

Total investments and other assets

3,828

3,683

18,013

17,69652,47646,854

Total non-current assets
Total assets-5-

SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

(Millions of yen)
2Q 2022(As of Jun. 30, 2022)

Fiscal Year 2021
(As of Dec. 31, 2021)
Liabilities
Current liabilities
Electronically recorded obligations-operating

6,612

5,359

Accounts payable-trade

2,761

2,186

Short-term borrowings

550

620

Income taxes payable

22

24

Contract liabilities
Provision for bonuses for directors (and otherofficers)
Provision for sales promotion expenses

-

771

6

-

258

30

Provision for bonuses

33

30

Other

5,721

3,857

Total current liabilities

15,966

12,880

3,005

3,595

6

6

Non-current liabilities
Long-term borrowings
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities

296

554

3,307

4,155

19,274

17,035

Net assets
Shareholders’ equity
Share capital

100

100

Capital surplus

30,08430,084Retained earnings

7,061

3,212

Treasury shares(2,953)(2,953)

Total shareholders’ equity

34,29130,442

267

283

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
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

-6-

119

511

(1,516)(1,516)38

67(1,089)

(655)

-

30

33,20229,81852,47646,854SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income(Quarterly Consolidated Statement of Income)(For the Six-month Period)
2Q 2021(Jan. 1, 2021 – Jun. 30, 2021)(Millions of yen)
2Q 2022(Jan. 1, 2022 – Jun. 30, 2022)

Net sales

37,90528,389

Cost of sales

18,463

14,400Gross profit

19,442

13,989Selling, general and administrative expenses

18,96817,897473(3,908)

24

21

23

4

48

101

Operating profit (loss)
Non-operating income
Interest and dividend income
Share of profit of entities accounted for using equity
methodForeign exchange gains
Gain on adjustment of account payable

42

89

Other

226

121

Total non-operating income

365

338

54

23

Rental expenses on real estate

19

35

Commission expenses

231

98

Non-operating expenses
Interest expenses

Other

34

21

Total non-operating expenses

339

178

499

(3,749)-134

Subsidy income

162

187

Total extraordinary income

162

321

0

4

151

172

9

-

Ordinary profit (loss)
Extraordinary income
Gain on sale of shares of subsidiaries and associates

Extraordinary losses
Loss on sale and retirement of non-current assets
Loss on tax purpose reduction entry of non-current
assetsLoss on sale of shares of subsidiaries and associates
Loss on change in equity

110-

Total extraordinary losses

272

176

Profit (loss) before income taxes

388(3,604)

Income taxes

(89)

52

Profit (loss)

478(3,656)

Loss attributable to non-controlling interests-(0)

Profit (loss) attributable to owners of parent

478(3,656)-7-

SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

(Quarterly Consolidated Statement of Comprehensive Income)(For the Six-month Period)
2Q 2021(Jan. 1, 2021 – Jun. 30, 2021)(Millions of yen)
2Q 2022(Jan. 1, 2022 – Jun. 30, 2022)

478(3,656)

Valuation difference on available-for-sale securities

55

15

Deferred gains or losses on hedges

204

391

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

(10)

3

183

6

433

416

911

(3,239)911(3,239)-(0)Profit (loss)
Other comprehensive income

Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to non-controllinginterests-8-

SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

(3) Quarterly Consolidated Statement of Cash Flows
2Q 2021(Jan. 1, 2021 – Jun. 30, 2021)(Millions of yen)
2Q 2022(Jan. 1, 2022 – Jun. 30, 2022)

388
620
(10)
95

(3,604)
730
(41)
17

12

30

(24)
54

(21)
23

(23)

(4)

0
151

4
172

9

(134)

(162)
110
37
(964)
713
882
(1,294)
(138)

(187)
(170)
267
1,837
(1,500)104(1,914)172

Subtotal

458(4,218)Interest and dividends received
Interest paid
Income taxes refund (paid)

97
(57)
(109)

50
(22)
111

Net cash provided by (used in) operating activities

388(4,079)

(309)
(894)
162
(295)

(40)
(1,166)
187
(15)

2,773

626

49

134

1,486

(273)

(2,100)
(534)

1,000
(340)

-

31

(0)
(37)

(186)
(22)

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(2,672)

482

34

82

(762)

(3,787)

Cash and cash equivalents at beginning of period

19,592

15,665

Cash and cash equivalents at end of period

18,83011,878Cash flows from operating activities
Profit (loss) before income taxes
Depreciation
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 loss (profit) of entities accounted for using
equity method
Loss (gain) on sale and retirement of non-current assets
Loss on tax purpose reduction entry of non-current assets
Loss (gain) on sale of shares of subsidiaries andassociates
Subsidy income
Loss (gain) on change in equity
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in trade payables
Increase (decrease) in contract liabilities
Increase (decrease) in other current liabilities
Other, net

Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Subsidies received
Purchase of investment securities
Proceeds from sale of shares of subsidiaries resulting inchange 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 borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from share issuance to non-controllingshareholders
Dividends paid
Other, net-9-SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

(4) Notes to Quarterly Consolidated Financial Statements(Going Concern Assumption)
Not applicable.
(Significant Changes in Shareholders’ Equity)
Not applicable.
(Changes in Significant Subsidiaries during the Period)
Senshukai Make Co- Inc. and WellServe Co., Ltd.) were included in the scope of consolidation due to theseestablishments. These companies are specified subsidiaries of Senshukai.
Huit laboratories, Inc., a consolidated subsidiary of Senshukai, was excluded from the scope of consolidation
following the sales of all shares of this company at the end of the second quarter of 2022.
(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements)(Calculation of tax expense)
Tax expenses are calculated by first determining a reasonable estimate of the effective tax rate after the applicationof tax effect accounting with respect to profit before income taxes for the fiscal year that includes the applicable
quarter and multiplying the profit before income taxes for that quarter by that rate. However, Senshukai uses
legally stipulated effective tax rates to calculate tax expenses when the use of estimated tax rates produces a clearly
irrational result.
(Changes in Accounting Policies)(Application of the Accounting Standards for Revenue Recognition)
Senshukai is applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31,2020) and other standards from the beginning of the first quarter of 2022. Based on these standards, revenue
expected to be received in exchange for the provision of goods and services is recognized when the control of thegoods and services is transferred to customers.
The main changes resulting from the application of the Accounting Standard for Revenue Recognition are as
follows:(1) Revenue recognition concerning the Senshukai Point Program
In prior years, Senshukai maintained a provision for sales promotion expenses based on the expected future use ofpoints that customers receive when they buy Senshukai merchandise in order to prepare for the use of these points.
Additions to this allowance were classified as selling, general and administrative expenses. In accordance with the
new revenue recognition standard, these points are now classified as a performance obligation and recognition ofrevenue is deferred.
(2) Revenue recognition concerning point programs of other companies
In prior years, an amount equivalent to the value of the points of point programs operated by other companies w asclassified as selling, general and administrative expenses. In accordance with the new revenue recognition standard,
the calculation of transaction prices concerning merchandise sale performance obligations to customers now uses
the method of recognizing revenue after deducting transaction prices as the amount recovered for third parties.
(3) Revenue recognition concerning shipping expenses paid by customers
In prior years, shipping expenses received from customers were deducted from selling, general an d administrative
expenses. In accordance with the new revenue recognition standard, payments from customers for shipping
expenses are now recognized as revenue because the merchandise shipping service is included in the performanceobligation involving the provision of merchandise to customers.

- 10 -SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

(4) Revenue recognition concerning sales of merchandise that may be returned
In prior years, for transactions of merchandise that may be returned, the value of merchandise returned bycustomers was deducted from sales when Senshukai confirmed the receipt of the merchandise. In accordance withthe provision of the new revenue recognition standard concerning variable compensation, revenue for merchandisethat is expected to be returned is not recognized when the merchandise is sold. Instead, a refund liability is now
recognized that is equivalent to the payment that was or will be received for the applicable merchandise.
For the application of the Accounting Standard for Revenue Recognition, in accordance with the transitional
measures in the proviso to Paragraph 84 of this standard, the cumulative effect of the retrospective application of
the new accounting standard, if it is applied prior to the first quarter of 2022, is added to or subtracted from retained
earnings at the beginning of the first quarter of 2022. The new standard is then applied beginning with this amountof retained earnings.
As a result, net sales increased 701 million yen and cost of sales increased 3 million yen. Operating loss increased
127 million yen, and ordinary loss and loss before income taxes increased 141 million yen each in the first half of2022. In addition, there was a decrease of 5 million yen in retained earnings at the beginning of 2022.
Due to the application of the Accounting Standard for Revenue Recognition, “Notes and accounts receivable -trade”
that was presented in the current assets section of the consolidated balance sheet in 2021 is, from the first quarterof 2022, included in “Notes and accounts receivable-trade, and contract assets.” In addition, the amountcorresponding to contract liabilities in the revenue recognition standards, that was included in “Other” presented
in the current liabilities section in 2021 is, from the first quarter of 2022, stated as “Contract liabilities.” Inaccordance with the transitional treatment prescribed in Paragraph 89-2 of the Accounting Standard for Revenue
Recognition, no reclassification has been made to the prior year’s consolidated financial statements to conform to
the new presentation.
Application of the Accounting Standards for Measurement of Fair Value
Senshukai has applied the Accounting Standard for Measurement of Fair Value (ASBJ Statement No. 30, July 4,2019) and other standards from the beginning of the first quarter of 2022, and has applied the new accounting
policies set forth by the Accounting Standard for Measurement of Fair Value, etc. prospectively in acc ordance withthe transitional measures prescribed in Paragraph 19 of the Accounting Standard for Measurement of Fair Valueand Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019).
There is no effect of the application of these standards on the quarterly consolidated financial statements.
(Additional Information)(Application of tax effect accounting associated with the transition from the consolidated taxation system to thegroup tax sharing system)
Senshukai and its consolidated subsidiaries are transitioning to the group tax sharing system that was created by
the Act on Partial Amendments to the Income Tax Act, etc. (Act No. 8 of 2020) and, in conjunction with thistransition, has reexamined items concerning the non-consolidated taxation system. With respect to this transition
and reexamination, Senshukai and its consolidated subsidiaries have not used the provisions of Paragraph 44 of
Implementation Guidance on Tax Effect Accounting (Accounting Standards Board of Japan (ASBJ) Guidance No.
28, February 16, 2018) in accordance with the treatment in Paragraph 3 of Practical Solution on the Treatment of
Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing S ystem(ASBJ Practical Issues Task Force (PITF) No. 39, March 31, 2020). As a result, deferred tax assets and deferred
tax liabilities are based on the tax law prior to these amendments.
(Uncertainty of accounting estimates)
As of the end of June 2022, there were fewer restrictions on activities in Japan because the severity of the pandemic
had declined. Despite this improvement, the outlook for the Japanese economy remains unclear because ofincreasing geopolitical risk caused by the Ukraine crisis and other events, rising U.S. interest rates, exchange rate
volatility, and inflation that includes a sharp rise in the cost of raw materials. Senshukai assumes that these factors
will have only a limited effect on accounting estimates. However, due to problems involving the launch of the new- 11 -SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

core IT system in January 2022, marketing activities were suspended and the level of normal business activities
was reduced in order to focus on handling inquiries from customers. Due to this si tuation, sales of Belle Maisonin the core mail-order and online shopping business were far below sales one year earlier, resulting in lower
segment sales and earnings. Currently, marketing activities have resumed, the volume of business activities isincreasing and there are new actions for achieving a sales recovery. The entire Senshukai Group is firmly
committed to restoring the trust of customers and achieving a recovery in the volume of orders. Although Senshukai
is using the best possible estimates based on information that is currently available, a change in the business climate
or problems involving the new core IT system may have an effect on the financial condition, results of operations
and cash flows of the Senshukai Group.

- 12 -SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

(Segment Information)
I 2Q 2021 (Jan. 1, 2021 – Jun. 30, 2021)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment
Mailorder andBridal Corporates Insurance
onlineSub-total
business business businessshopping
business

Others(Note 1)

Total

(Millions of yen)Amounts
shown onquarterly
Adjustment
consolidated(Note 2)statement ofincome(Note 3)

Net sales
Sales to customers
32,842
1,733
2,239
174
36,989916
37,90537,905Inter-segment
127
5
19
151
0
151
(151)
sales or transfers
Total
32,969
1,738
2,258
174
37,141916
38,057(151)
37,905
Segment profit
1,331(1,045)
203
59
550
(77)
472
0
473
(loss)
Notes: 1. Others represent the businesses which are not included in any of the four reportable segments and consist of thechildcare support 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 profit on the quarterly consolidated statementof income.

2. Information related to impairment of non-current assets, goodwill, etc. for each reportable segment
Significant changes in the amount of goodwill
In the bridal business, all shares of consolidated subsidiaries Dears Brain Inc. and PLANETWORK CO., LTD.
were sold at the end of the first quarter of 2021. As a result of the sales of these subsidiaries shares, goodwill
decreased 1,158 million yen.
3. Information related to assets for each reportable segment
Significant decrease in assets due to decrease in number of subsidiaries
Consolidated subsidiaries Dears Brain Inc. and PLANETWORK CO., LTD., and WONDERSTAGE Co., Ltd., awholly owned subsidiary of Dears Brain and a sub-subsidiary of Senshukai, were excluded from the scope of
consolidation following the sales of all shares of Dears Brain and PLANETWORK at the end of the first quarterof 2021. As a result, segment assets of the bridal business for the second quarter of 2021 decreased 14,911 million
yen, compared with the end of 2020.

- 13 -SENSHUKAI CO.,LTD. (8165) Financial Results for the Second Quarter of Fiscal Year 2022

II 2Q 2022 (Jan. 1, 2022 – Jun. 30, 2022)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment
Mail-orderand online
shopping
business

Corporates
business

Insurancebusiness

Sub-total

Others(Note 1)

Total

(Millions of yen)Amounts
shown onquarterly
Adjustment consolidated
statement ofincome(Note 2)

Net sales
Sales to customers
25,1452,217
214
27,577811
28,38928,389Inter-segment
118
20
139
0
139
(139)
sales or transfers
Total
25,2632,238
214
27,716812
28,529(139)
28,389Segment profit(4,042)107
97(3,837)(70) (3,908)(3,908)(loss)
Notes: 1. Others represent the businesses which are not included in any of the four reportable segments and consist of thechildcare support business and manufacturing and sales of cosmetics.
2. Segment profit (loss) is adjusted to be consistent with the operating loss on the quarterly consolidated statement ofincome.

2. Information related to revisions for reportable segments
In 2021, consolidated subsidiaries Dears Brain Inc. and PLANETWORK CO., LTD., and WONDERSTAGE Co.,
Ltd., a wholly owned subsidiary of Dears Brain and a sub-subsidiary of Senshukai, were excluded from the scopeof consolidation following the sales of all shares of Dears Brain and PLANETWORK. As a result, the Senshukai
Group no longer operates a bridal business. Consequently, there is no longer business segment information forthe bridal business beginning with the first quarter of 2022.
(Application of the Accounting Standards for Revenue Recognition)
As described in Changes in Accounting Policies, Senshukai has applied the Accounting Standard for Revenue
Recognition (ASBJ Statement No. 29, March 31, 2020) from the beginning of the first quarter of 2022 and changed
the accounting method for revenue recognition. Accordingly, the method for calculating segment profit or loss
has been changed as well.
The effect of this change was to increase net sales by 707 million yen and to increase segment loss by 127 million
yen for the first half of 2022 in the mail-order and online shopping business. Net sales decreased 6 million yen
and there was no change in segment profit in other businesses.

* 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 a ccepted in Japan, for the convenience ofreaders who prefer an English translation.

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