Summary of Financial Results for the Second Quarter of Fiscal Year 2019
(Six Months Ended June 30, 2019)[Japanese GAAP]
July 25, 2019

Company name: SENSHUKAI CO.,LTD.

Stock exchange: Tokyo Stock Exchange, First Section
Stock code:
8165
URL: https://www.senshukai.co.jp
Representative:
Mr. Kenji Kajiwara, President and Representative Director
Inquiries:
Mr. Tetsuya Takahashi, General Manager, Corporates Headquarters
Tel: +81-6-6881-3220
Scheduled date of filing of Quarterly Report: August 8, 2019
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 2019 (January 1, 2019 – June 30, 2019)(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 2019
43,888 (23.3)
559
2Q 2018
57,199(9.5)(1,138)
Note: Comprehensive income (millions of yen) 2Q 2019: 7,336 (-%)

Millions of yen%-

Net income per share
2Q 2019
2Q 2018

Millions of yen%

Millions of yen

%

7,900
(1,153)

-

1,120
(993)
2Q 2018: (1,588) (-%)

Diluted net income per share

Yen

Yen

196.58(24.02)149.10-(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen

2Q 2019
71,56642,030Fiscal Year 201875,94934,853
Reference: Shareholders’ equity (millions of yen) 2Q 2019: 42,030

Net assets per share
%

Yen

58.7
45.8
Fiscal Year 2018: 34,768

869.12689.05

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

Yen

Year-end

Yen

Total
Yen

Fiscal Year 2018
0.00
0.00
Fiscal Year 2019
0.00
Fiscal Year 2019 (forecasts)
Notes: 1. Revision to the most recently announced dividend forecast: None
2. Dividend forecast for the Fiscal Year 2019 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.

Yen

0.00
-

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%

Millions of yen %Millions of yen %Millions of yen %YenFull Year 2019
89,000 (21.5)(700) (200) 6,300 156.75
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 wasannounced today (July 25, 2019).

* 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 2019:52,056,993 sharesFiscal Year 2018:

52,230,393 sharesFiscal Year 2018:12,040,107 shares

2Q 2018:

48,038,135 shares

2) Number of treasury shares at the end of the period
2Q 2019:

11,865,432 shares

3) Average number of shares outstanding during the period
2Q 2019:

40,190,571 shares

Note: The Senshukai shares held by the trust that are recorded as treasury shares under shareholders’ equity is included in
the number of treasury shares, and is deducted from the number of shares that is used to calculate the average
number of shares outstanding. On April 19, 2019, the Board of Directors approved a resolution to terminate thestock compensation plan that is linked to results of operations. As a result, 173,400 shares of Senshukai stock thatwere held by the trust were cancelled on June 21, 2019.
* 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 Consolidat ed 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 26, 2019. Materials to b e
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 201815,178,083.00
Fiscal Year 2019
20,000,000.00
Fiscal Year 2019 (forecasts)
Note: Five shares of the Class A preferred stock were issued on March 30, 2018.

Class B preferred stock

1Q-endYen

Yen

Fiscal Year 2018
Fiscal Year 2019
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

30,356,166.00-

20,000,000.00

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

Of the 2Q-end dividends for the fiscal year 2019, breakdown of dividends paid from the capital surplus are shown
below.
Record date2Q-endDividend per share (Yen)
20,000,000.00
Total dividends (Millions of yen)100
Note: Reduction rate in net assets due to the dividends paid from net assets is 0.003.

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(Additional Information)

9(Segment Information)

11

3. Other
Important Information about Going Concern Assumption

1212

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 2019, the Japanese economy recovered slowly with thesupport of improvements in corporate earnings, employment situation and other economic indicators. However,
the outlook remains uncertain because of increasingly heated U.S.-China trade friction, slowing economic growthin China and other reasons.
In Japan’s retail industry, consumers continue to economize and seek low prices as they retain a defensive stanceabout spending. In addition, competition among retail companies and companies in outside the retail sector isincreasing. The emerging risk of higher prices of raw materials and logistics services create more challenges. As aresult, the operating environment in the retail industry remains difficult.
Net sales in the cumulative second quarter were down 23.3% year-over-year to 43,888 million yen. This decrease
was attributable primarily to measures to optimize the size of the mail-order business and the exclusion fromconsolidation of Belle Neige Direct Co., Ltd. and Mobacolle Co., Ltd.
There was an operating profit of 559 million yen compared with a 1,138 million yen loss in the same period of
2018. This was attributable to measures to lower the cost of sales ratio and overall selling, general andadministrative expenses. Ordinary profit was 1,120 million yen compared with a loss of 993 million yen in thesame period of 2018 due to an increase in share of profit of entities accounted for using equity method. Profit
attributable to owners of parent was 7,900 million yen compared with a loss of 1,153 million yen in the same
period of 2018 mainly due to a gain on sales of non-current assets and a gain on sales of investment securities.
Overview by segment are as follows.
In previous years, the insurance and credit card business was included in Others. Due to its increasing importance,
this business became a separate reportable segment beginning with the second quarter of 2019. Prior-year segment
information has been revised to reflect the new segment classification to permit comparisons.
(Mail-order Business)
The catalog and Internet businesses are the primary components of this segment. Consolidated sales were down
30.8% year-over-year to 30,982 million yen. This was the result of measures to significantly alter the structure of
Belle Maison, the core business of this segment. Activities included optimizing the scale of this business andexcluding Belle Neige Direct Co., Ltd. and Mobacolle Co., Ltd. from consolidation. There was an operating profitof 32 million yen compared with a 1,626 million yen loss in the same period of 2018. This improvement was
mainly the result of a higher gross profit margin and measures to reduce fixed expenses, such as a reexaminationof the workforce.
(Bridal Business)
In this segment, where the main activity is the house wedding business, a new location started operations in thecity of Kagoshima during the cumulative second quarter of 2019. The bridal business performed well during the
cumulative second quarter as average sales per weddings increased, mainly at existing locations.
As a result, consolidated sales increased 7.6% year-over-year to 9,557 million yen and operating profit decreased
3.7% year-over-year to 301 million yen.
(Corporates Business)
Consolidated sales in the corporates business, which provides products and services to corporations, decreased
9.7% year-over-year to 2,223 million yen. Operating profit increased 1.9% year-over-year to 167 million yen.
(Insurance and Credit Card Business)
Consolidated sales in the insurance and credit card business, which provides insurance and credit card services

primarily to Belle Maison members, increased 6.0% year-over-year to 274 million yen. Operating profit increased
181.3% year-over-year to 146 million yen.
(Others)
Consolidated sales in other businesses, which include childcare support business and manufacturing and sales ofcosmetics, increased 4.2% year-over-year to 850 million yen. There was an operating loss of 88 million yen
compared with a loss of 42 million yen in the same period of 2018.
(2) Explanation of Financial Position(Balance sheet position)
Assets totaled 71,566 million yen at the end of the second quarter of 2019, a decrease of 4,382 million yen fromthe end of 2018.
Current assets decreased 15 million yen to 40,279 million yen. The main factors were decreases of 1,890 million
yen in notes and accounts receivable-trade, 1,703 million yen in accounts receivable-other and 1,660 million yen
in merchandise and finished goods, while there was an increase of 5,199 million yen in cash and deposits.
Non-current assets decreased 4,367 million yen to 31,286 million yen. The factors included decreases of 3,060
million yen in property, plant and equipment, 199 million yen in intangible assets and 1,106 million yen in
investments and other assets.
Current liabilities decreased 10,542 million yen to 18,226 million yen. The main factors were decreases of 4,340
million yen in current portion of bonds with share acquisition rights, 3,866 million yen in other and 1,510 million
yen in accounts payable-trade. Non-current liabilities decreased 1,017 million yen to 11,309 million yen. The
main factor was a decrease of 677 million yen in long-term loans payable.
Net assets increased 7,177 million yen to 42,030 million yen mainly due to booking of profit attributable toowners of parent of 7,900 million yen. As a result, the equity ratio was 58.7%.
Starting with the beginning of the first quarter of 2019, Senshukai has applied the “Partial Amendments to
Accounting Standard for Tax Effect Accounting” (Accounting Standards Board of Japan (ASBJ) Statement No. 28,
February 16, 2018), etc. Prior-year figures have been adjusted retroactively in order to facilitate comparisons.
(Cash flow position)
The balance of cash and cash equivalents at the end of the second quarter of 2019 was 22,349 million yen, an
increase of 5,202 million yen from the end of 2018.
Operating activities provided net cash of 1,443 million yen (net cash used of 3,322 million yen in the same periodof 2018). The main cash inflow was profit before income taxes of 7,942 million yen. The main cash outflows
include gain on sales and retirement of non-current assets of 5,562 million yen.
Investing activities provided net cash of 8,991 million yen (net cash used of 29 million yen in the same period of
2018). The main cash inflows include proceeds from sales of property, plant and equipment of 8,516 million yen
and proceeds from sales of investment securities of 1,449 million yen. The main cash outflows include 1,372
million yen for the purchase of property, plant and equipment.
Financing activities used net cash of 5,228 million yen (net cash used of 493 million yen in the same period of
2018). The main cash outflows were 4,340 million yen for payment for redemption of bonds with shareacquisition rights and 756 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 for fiscal year 2019 (January 1, 2019 to December 31, 2019) thatwas released on April 25, 2019. For more information, please refer to “Notice of Revisions to Consolidated
Outlook” (Japanese version only) that was announced today (July 25, 2019).

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Millions of yen)
2Q 2019(As of Jun. 30, 2019)

Fiscal Year 2018
(As of Dec. 31, 2018)
AssetsCurrent assets
Cash and deposits

17,15022,349Notes and accounts receivable-trade

5,532

3,641

Merchandise and finished goods

9,732

8,072

Accounts receivable-other

6,110

4,407

Other

1,903

1,934

Allowance for doubtful accounts

(133)

(126)

40,29540,279Buildings and structures, net

13,606

12,263

Land

8,477

6,809

980

930

23,06320,003

1,736

1,608

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

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

729

658

2,466

2,266

Investment securities

6,458

5,828

Other

3,846

3,334

Total intangible assets
Investments and other assets

Allowance for doubtful accounts

(180)

(146)

Total investments and other assets

10,1239,017

35,65331,28675,94971,566

Total non-current assets
Total assets

(Millions of yen)
2Q 2019(As of Jun. 30, 2019)

Fiscal Year 2018
(As of Dec. 31, 2018)
Liabilities
Current liabilities
Electronically recorded obligations-operating

6,631

6,360

Accounts payable-trade

4,836

3,326

Short-term loans payable

1,468

1,320

Current portion of bonds with share acquisition rights

4,340

-

Income taxes payable

318

82

Provision for sales promotion expenses

305

250

Provision for bonuses

291

176

Other

10,575

6,709

Total current liabilities

28,76818,226Long-term loans payable

9,799

9,121

Net defined benefit liability

69

4

Non-current liabilities

Provision for management board incentive plan trust

2

-

Other

2,456

2,184

Total non-current liabilities

12,327

11,30941,09629,536

Capital stock

22,304100

Capital surplus

23,712

39,644Retained earnings(3,526)

10,609Treasury shares(6,932)(6,800)Total shareholders’ equity

35,55843,554

Valuation difference on available-for-sale securities

605

226

Deferred gains or losses on hedges

60

(44)

Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income

Revaluation reserve for land

(1,346)(1,516)

Foreign currency translation adjustment

(61)

(138)

Remeasurements of defined benefit plans

(47)

(52)

Total accumulated other comprehensive income(789)(1,523)84-

34,85342,03075,94971,566

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

(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income(Quarterly Consolidated Statement of Income)(For the Six-month Period)
2Q 2018(Jan. 1, 2018 – Jun. 30, 2018)(Millions of yen)
2Q 2019(Jan. 1, 2019 – Jun. 30, 2019)

Net sales

57,19943,888

Cost of sales

31,357

21,902Gross profit

25,842

21,986

Selling, general and administrative expenses

26,981

21,426

Operating profit (loss)(1,138)559

Interest income

15

12

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

41

22

144

448

130

141

Other

215

69

Total non-operating income

547

693

Interest expenses

76

66

Commission fee

265

21

Other

59

44

Non-operating income

Non-operating expenses

Total non-operating expenses

401

132

(993)

1,120

Gain on sales of non-current assets

0

5,619

Gain on sales of investment securities

Ordinary profit (loss)
Extraordinary income

171

926

Gain on sales of shares of subsidiaries and associates-

336

Subsidy income

46

255

Total extraordinary income

218

7,138

Extraordinary losses
Loss on sales and retirement of non-current assets

057

Loss on reduction of non-current assets

46

230

Impairment loss

157

1

Loss on sales of shares of subsidiaries and associates-

4

Business structure reform expenses

23

18

Other

3

3

Total extraordinary losses

231

316

Profit (loss) before income taxes(1,006)

7,942

Income taxes

145

42

Profit (loss)(1,152)

7,900

Profit attributable to non-controlling interests

1-

Profit (loss) attributable to owners of parent(1,153)7,900

(Quarterly Consolidated Statement of Comprehensive Income)(For the Six-month Period)(Millions of yen)
2Q 2019(Jan. 1, 2019 – Jun. 30, 2019)

2Q 2018(Jan. 1, 2018 – Jun. 30, 2018)
Profit (loss)(1,152)7,900

Valuation difference on available-for-sale securities

(184)

(377)

Deferred gains or losses on hedges

(182)

(67)

(9)

2

(59)

(121)

(436)

(564)

(1,588)

7,336(1,589)

7,336

1

-

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

(3) Quarterly Consolidated Statement of Cash Flows(Millions of yen)
2Q 2018
2Q 2019(Jan. 1, 2018 – Jun. 30, 2018) (Jan. 1, 2019 – Jun. 30, 2019)
Cash flows from operating activities
Profit (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
Payments for business structure reform expenses
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
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
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
Purchase of investment securities
Proceeds from sales of investment securities
Payments for sales of shares of subsidiaries resulting in change inscope of consolidation
Proceeds from sales of shares of subsidiaries resulting in change inscope 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
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
Cash and cash equivalents at end of period(1,006)
899
157
(62)
(144)
(58)
(56)
76
(144)
0
46
(171)
(46)
657
1,207
2,037
(2,728)(1,972)(20)(1,331)
73
(73)
(88)
(1,902)(3,322)

7,942
926
1
(22)
(113)
(54)
(34)
66
(448)
(5,562)230(1,258)
(255)
18
1,200
1,137
1,542
(1,281)(1,783)
607
2,859
64
(66)
(43)
(1,371)
1,443

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

(1,372)
8,516
(166)
152
(50)
1,449

-

(186)

-

398

474
(29)

250
8,991

(10)
(616)
6,975
(6,784)
(1)
(56)
(493)
(78)
(3,923)
17,323
13,400(756)(4,340)
(0)
(75)
(56)
(5,228)(3)
5,202
17,14722,349(4) 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 28, 2019, shareholders approved a resolution to eliminate
the retained earnings deficit. In accordance with Article 452 of the Companies Act, other capital surplus wasdecreased by 6,065 million yen and this amount was transferred to retained earnings brought forward. This
process decreased the capital surplus by 6,065 million yen and increased the retained earnings by 6,065 million
yen in the cumulative second quarter of 2019.
At the same meeting, shareholders also approved a resolution to reduce capital stock by 22,204 million yen to 100
million yen, pursuant to Article 447, Clause 1 of the Companies Act, and to transfer the entire reduction to othercapital surplus. This process decreased the capital stock by 22,204 million yen and increased the capital surplus
by 22,204 million yen in the cumulative second quarter of 2019.
In addition, on April 19, 2019, the Board of Directors approved a resolution to terminate the stock compensation
plan that is linked to results of operations. As a result, shares of Senshukai stock with a value of 131 million yenthat were held by the trust were cancelled on June 21, 2019. This process decreased the capital surplus by 131
million yen and the treasury shares by 131 million yen in the cumulative second quarter of 2019.
The result of all these measures was capital stock of 100 million yen, capital surplus of 39,644 million yen,retained earnings of 10,609 million yen and treasury shares of 6,800 million yen at the end of the second quarterof 2019.
(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 afte r 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.
(Additional Information)(Application of the Partial Amendments to Accounting Standard for Tax Effect Accounting)Senshukai has applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28, February 16, 2018), etc. at the beginning of the first quarter of 2019. Accordingly, deferred tax
assets and deferred tax liabilities are reclassified and included in the investments and other assets section and thenon-current liabilities section, respectively.
(Absorption and merger of consolidated subsidiaries)
On May 24, 2019, the Board of Directors approved resolutions to absorb and merge with consolidated subsidiary
Senshukai Retailing Service Co., Ltd. The agreement was signed on the same day.
1. Purpose of merger
Senshukai Retailing Service supervises the operations of Belle Maison stores. The decision was made to abso rb
this company for the purposes of using the Senshukai Group’s resources more effectively and increasing theefficiency of business activities.
2. Summary of merger(1) Schedule of merger- Shareholders’ meeting to approve merger contract: May 24, 2019
- Signing of merger contract:
May 24, 2019
- Merger date (effective date):

August 1, 2019

Note: As this is a simple merger pursuant to Article 796, Clause 2 of the Companies Act, approval of the merger
contract by Senshukai shareholders is not needed.

(2) Method of merger
An absorption-type merger between Senshukai, which will be the surviving company, and Senshukai
Retailing Service, which will be liquidated.
(3) Distribution of stock associated with the merger
There will be no distribution of stock, cash or other considerations in association with this merger because
Senshukai Retailing Service is a wholly owned subsidiary of Senshukai.
(4) Treatment of share acquisition rights and bonds with share acquisition rights of the dissolved company
Not applicable.
3. Outline of the merging companies
Surviving company

Dissolved company(1) Company name

SENSHUKAI CO.,LTD.

Senshukai Retailing Service Co., Ltd.

(2) Location

1-6-23 Doshin, Kita-ku, Osaka
Kenji Kajiwara, President andRepresentative Director
Mail-order business/Bridal
business/Corporates business/Insurance andcredit card business/Other
100 million yen

1-6-23 Doshin, Kita-ku, Osaka(3) Representative(4) Business(5) Capital stock

Koichi Ishida, President
Outsourced sales activities
9 million yen(6) Established

November 9, 1955
January 19, 2009
52,057,007 shares (Common shares:
Number of shares(7)
52,056,993 shares; Class A preferred stock: 180 shares
outstanding
5 shares; Class B preferred stock: 9 shares)(8) Fiscal year end
December 31
December 31
Brastsheave Co., Ltd.:
9.08%
Toppan Printing Co., Ltd.:
4.57%
Major shareholders andSumitomo Mitsui Banking Corporation:(9) shareholding ratio (as of
SENSHUKAI CO.,LTD.: 100%
4.14%
June 30, 2019)
Dai Nippon Printing Co., Ltd.:
3.76%
Nippon Life Insurance Company: 1.97%(10) Results of operations and financial position for the most recent fiscal year (Fiscal 2018)
Fiscal year 2018 (Consolidated)

Fiscal year 2018 (Non-consolidated)

Net assets

34,853 million yen

68 million yen

Total assets

75,949 million yen

89 million yen

Net assets per share

689.05 yen

378,273.68 yen

Net sales

113,344 million yen

202 million yen

Operating profit(4,063) million yen

33 million yen

Ordinary profit
Profit (loss) attributable toowners of parent
Net income per share(4,277) million yen

33 million yen(6,027) million yen

21 million yen(136.75) yen

119,236.97 yen

4. Post-merger profile
There will be no change in the company name, location, representative, business activities, capital and fiscal
year end of Senshukai as a result of this merger.
5. Effect on results of operations
Senshukai believes that this merger will have only a negligible effect on the consolidated results of operationsin 2019 because it is a merger with a wholly owned consolidated subsidiary.

(Segment Information)
I 2Q 2018 (Jan. 1, 2018 – Jun. 30, 2018)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment
Insurance
Mail-order Bridal Corporates and credit
Sub-total
business business businesscardbusiness

Others(Note 1)

Total

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

Net sales
Sales to customers
44,779
8,880
2,463
259
56,383816
57,19957,199Inter-segment
462
0
87
0
550
33
584
(584)
sales or transfers
Total
45,241
8,880
2,551
259
56,933849
57,783(584)
57,199Segment profit(1,626)312
164
52(1,096)(42) (1,138)
0(1,138)(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 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.
II 2Q 2019 (Jan. 1, 2019 – Jun. 30, 2019)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment
Insurance
Mail-order Bridal Corporates and credit
Sub-total
business business businesscardbusiness

Others(Note 1)

Total

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

Net sales
Sales to customers
30,982
9,557
2,223
274
43,038850
43,88843,888Inter-segment
496
0
0
497
0
497
(497)
sales or transfers
Total
31,479
9,557
2,224
274
43,535850
44,386(497)
43,888Segment profit
32
301
167
146
647
(88)
559
559
(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 profit on the quarterly consolidated statementof income.

2. Information related to revisions for reportable segments
In previous fiscal years, the insurance and credit card business was included in Others. Due to its increasing
importance, this business became a separate reportable segment beginning with the second quarter of 2019.
The segment information for 2Q 2018 is prepared and disclosed based on the reportable segment classifica tion
after the change.
3. 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 the cumulative second quarter of 2019, Senshukai Group had a consolidated operating profit of 559 million yen,ordinary profit of 1,120 million yen and profit attributable to owners of parent of 7,900 million yen. However, 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 the going concern assumption. To eliminate these doubts andimprove results of operations, business structural reforms centered on the mail-order business are under way inaccordance with a medium-term management plan that 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.
(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 similar functions, and taking otheractions.
Some initiatives in the mail-order business have already been completed in 2018, such as inventory reductions
and the adjustment of personnel expenses to the proper level. The benefits of these actions are already beginning
to appear in 2019. Furthermore, following the focus on structural reforms for business operations that ended in the
cumulative second quarter of 2019, Senshukai has started implementing rules for maintaining proper inventory
levels in order to reduce opportunity losses and hold down the occurrence of surplus inventories.
In addition, for renewed growth, the organizational units that determine and execute marketing activities wil l bebased on customers rather than merchandise and marketing uses an approach that reflects the behavior patterns ofcustomers. One illustration of this new stance is a new catalog that covers several merchandise categories thatclosely match customers’ needs in these categories.
We are determined to use these measures to construct a solid earnings foundation and renewed growth in order toachieve a recovery in sales and earnings and stabilize the performance of the Senshukai Group.
At the end of the second quarter of 2019, cash and deposits were 22,349 million yen. Senshukai also has a credit
line 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.

* 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.