Summary of Financial Results for the Fiscal Year 2019 (Ended December 31, 2019)[Japanese GAAP]
February 13, 2020

Company name: SENSHUKAI CO.,LTD.

Stock exchange: Tokyo Stock Exchange, First Section
8165
URL: https://www.senshukai.co.jp
Mr. Kenji Kajiwara, President and Representative Director
Mr. Tetsuya Takahashi, General Manager, Corporates Headquarters
Tel: +81-6-6881-3220
Scheduled date of annual general meeting of shareholders: March 26, 2020
Scheduled date of payment of dividend: March 27, 2020
Scheduled date of filing of Annual Security Report: March 27, 2020
Preparation of supplementary materials for financial results: Yes
Holding of financial results meeting: Yes (for institutional investors and analysts)
Stock code:
Representative:
Inquiries:(All amounts are rounded down to the nearest millions of yen)

1. Consolidated Financial Results for the Fiscal Year 2019 (January 1, 2019 – December 31, 2019)(1) Consolidated operating results(Percentages represent changes from the same period of the previous fiscal year)
Profit attributable toOperating profit
Ordinary profit
owners of parent

Net sales
Millions of yen%

Millions of yen%

Millions of yen

Fiscal Year 201989,150 (21.3)
772
Fiscal Year 2018
113,344 (10.0)(4,063)
Note: Comprehensive income (millions of yen) Fiscal Year 2019: 7,896 (-%)
Net income per
share

Diluted net income
per share

Yen

Millions of yen

%

1,418
8,182
(4,277)(6,027)
Fiscal Year 2018: (6,836) (-%)-

Return on equity

Yen%

Ordinary income to Operating income
total assets
to net sales%

Fiscal Year 2019
201.11152.54
Fiscal Year 2018
(136.75)
Reference: Equity in earnings (losses) of affiliates (millions of yen)

21.2
(15.8)
Fiscal Year 2019: 421

%

%

1.9
(5.1)
Fiscal Year 2018: (27)

0.9
(3.6)

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen

Net assets per share%

Fiscal Year 201973,66442,490Fiscal Year 201875,94934,853
Reference: Shareholders’ equity (millions of yen) Fiscal Year 2019: 42,490

Yen

57.7
45.8
Fiscal Year 2018: 34,768

880.56689.05(3) Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents
at end of period

Millions of yen

Millions of yen

Millions of yen

Millions of yen

2,911(1,950)

8,685
3,196

(6,027)(1,414)22,713
17,147

Fiscal Year 2019
Fiscal Year 2018

2. Dividends
1Q-endYen

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

Yen

Yen

Total

Total dividends(total)Yen

Millions of yen

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

Fiscal Year 2018
0.00
0.00
0.00
Fiscal Year 2019
0.00
2.00
2.00
80
1.0
Fiscal Year 2020
2.00
2.00
4.00
8.0
(forecasts)
Note: 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.

%

0.3

3. Consolidated Outlook for Fiscal Year 2020 (January 1, 2020 – December 31, 2020)(Percentages represent changes from the same period of the previous fiscal year)
Profit attributable to Net income per
Operating profit
Ordinary profit
owners of parent
share

Net sales
Millions of yen

Full Year 2020

92,000% Millions of yen

3.2

1,800

% Millions of yen

132.9

2,000

% Millions of yen

41.0

%

Yen

2,200 (73.1)

49.76

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

(3) Number of shares outstanding (common shares)
1) Number of shares outstanding at the end of the period (including treasury shares)
Fiscal Year 2019:52,056,993 sharesFiscal Year 2018:

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

44,080,710 shares

2) Number of treasury shares at the end of the period
Fiscal Year 2019:11,865,448 shares

3) Average number of shares outstanding during the period
Fiscal Year 2019:40,191,068 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.

(Reference) Summary of Non-consolidated Financial Results
Non-consolidated Financial Results for Fiscal Year 2019 (January 1, 2019 – December 31, 2019)(1) Non-consolidated operating results(Percentages represent changes from the same period of the previous fiscal year)
ProfitOperating profit
Ordinary profit

Net sales
Fiscal Year 2019
Fiscal Year 2018

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

63,972
74,406(14.0)(16.5)(382)(5,211)-247(4,706)-

7,448(6,355)-

Net income per share
Fiscal Year 2019
Fiscal Year 2018

Diluted net income per share

Yen

Yen

182.84(144.18)

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

Net assets

Equity ratio

Millions of yen

Fiscal Year 201959,72739,348
Fiscal Year 2018
59,32732,321
Reference: Shareholders’ equity (millions of yen) Fiscal Year 2019: 39,348

Net assets per share
%

65.9
54.5
Fiscal Year 2018: 32,321

Yen

802.36628.14* This financial report is not subject to audit by certified public accountants or auditing firms.
* Cautionary statement with respect to forward-looking statements
Cautionary statement with respect to forecasts
The above projections are based on information available at the time of release of this report. Actual results could differ
significantly from these projections due to a variety of factors. For further details regarding the projections, please refer to page
4.
How to view supplementary information at the financial results meeting
Senshukai plans to hold a financial results meeting for institutional investors and analysts on February 14, 2020. 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 201815,178,083.00
Fiscal Year 2019
20,000,000.00
Fiscal Year 2020 (forecasts)
20,000,000.00
Note: Five shares of the Class A preferred stock were issued on March 30, 2018.

Class B preferred stock

1Q-endYen

Yen

Fiscal Year 2018
Fiscal Year 2019
Fiscal Year 2020 (forecasts)
Note: Nine shares of Class B preferred stock were issued on March 30, 2018.

Total
Yen

Yen

-

15,178,083.00
20,000,000.00
20,000,000.00

30,356,166.00
40,000,000.00
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 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

2Q-end: 0.003

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019

Contents of Attachments
1. Overview of Results of Operations

2(1) Results of Operations

2(2) Financial Position

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

4(5) Outlook

4(6) Important Information about Going Concern Assumption

5

2. Basic Approach for the Selection of Accounting Standards

5

3. Consolidated Financial Statements and Notes

6(1) Consolidated Balance Sheet

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

8

Consolidated Statement of Income

8

Consolidated Statement of Comprehensive Income

9(3) Consolidated Statement of Changes in Equity

10(4) Consolidated Statement of Cash Flows

12(5) Notes to Consolidated Financial Statements

13

Going Concern Assumption

13

Additional Information

13

Segment Information

13

Per Share Information

16

Significant Subsequent Events

16

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SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019

1. Overview of Results of Operations(1) Results of Operations
Overview
The Japanese economy recovered slowly in 2019 as the labor market and personal income continued to improvewith the support of strong corporate earnings. However, the outlook remains unclear because of tension involving
trade issues, Britain’s departure from the European Union and other uncertainty about the global economy. Thereis also uncertainty in Japan about consumer sentiment following the October 2019 consumption tax hike and forother reasons.
In Japan’s retail industry, consumers are remaining cautious about purchasing products and services. Furthermore,competition is increasing because of the diversification of purchasing behavior and the growth of platformbusinesses. As a result, the business climate for the Senshukai Group continues to be cha llenging.
Net sales in 2019 were down 21.3% from 2018 to 89,150 million yen. This decrease was attributable primarily tomeasures to optimize the size of the mail-order business and the exclusion from consolidation of Belle Neige
Direct Co., Ltd. and Mobacolle Co., Ltd.
There was an operating profit of 772 million yen compared with a 4,063 million yen loss in 2018. The profit was
the result of business structural reform measures for lowering expenses, and initiatives in the mail-order businessincluding inventory reductions and the adjustment of personnel expenses to the proper level . Ordinary profit was
1,418 million yen compared with a loss of 4,277 million yen in 2018 due to the booking of share of profit ofentities accounted for using equity method. Profit attributable to owners of parent was 8,182 million yen
compared with a loss of 6,027 million yen in 2018 mainly due to a gain on sales of non-current assets and a gainon sales of investment securities.
Overview by segment
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 from 2019. Prior-year segment information has been revised
to reflect the new segment classification to permit comparisons.
(Mail-order Business)
Consolidated sales in the mail-order business, centered on the catalog and the Internet businesses, decreased
29.1% year-over-year to 61,300 million yen in 2019. There was an operating loss of 805 million yen comparedwith a loss of 5,633 million yen in 2018.
There were several activities for the structural reform of this business in 2019. Major activities were an
improvement in merchandise ordering in order to reduce inventories, more joint activities with suppliers toincrease the gross profit margin, and measures to optimize the operations of overseas subsidiaries.
In 2019, Belle Neige Direct Co., Ltd. and Mobacolle Co., Ltd. were removed from consolidation. In addition, thisbusiness reexamined the sales channel strategy and its marketing activities and implemented merchandisingreforms. These activities were aimed at achieving a proper scale of operations for this business. To start growing
again, Belle Maison unveiled a new slogan: “Love. Then Ideas.” This expresses the commitment to creating ideasthat originate from love. There were also activities to attract more customers, particularly the use of “ #7 secondhug” TV and internet commercials. This business will continue to implement structural reforms while retaini ng
and attracting more members and increasing activities for selling highly appealing and innovative merchandise.
(Bridal Business)
Consolidated sales in the bridal business, centered on the house wedding business, increased 6.7% year -over-year
to 20,676 million yen. Operating profit decreased 3.3% year-over-year to 971 million yen.
In January 2019, this business opened The Baysuite Sakurajima Terrace in Kagoshima prefecture, expanding its
operations to 25 guest houses. Although sales increased, earnings were lower mainly because of up-front expenses
for the new guest house in Kagoshima and renovations at the Geihinkan guest house in Osaka. The Geihinkan has
performed very well following the renovation. This business plans to continue opening guest houses, mainly in-2-

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019

large cities in regions other than Japan’s major metropolitan areas, based on the strategy of establishing dominantpositions in targeted markets. Expanding activities associated with weddings is another goal.
(Corporates Business)
Consolidated sales in the corporates business, which provides products and services to corporations, decreased
7.8% year-over-year to 4,757 million yen. Operating profit increased 5.6% year-over-year to 358 million yen.
Sales decreased because of a reexamination of inefficient business operations. Earnings were higher mainly
because structural reforms lowered selling, general and administrative expenses as well as the ratio of these
expenses to sales.
(Insurance and Credit Card Business)
Consolidated sales in the insurance and credit card business, which provides services primarily to Belle Maison
members, decreased 8.5% year-over-year to 574 million yen. Operating profit increased 19.9% year-over-year to
307 million yen.
(Others)
Consolidated sales in other businesses, which include childcare support business and manufacturing and sales ofcosmetics, increased 7.3% year-over-year to 1,841 million yen. There was an operating loss of 60 million yen
compared with a loss of 31 million yen in 2018. The loss was caused mainly by up-front expenses for opening
childcare facilities in the childcare support business. In April 2019, operations started at Egao no Mori Nursery
School Asakusa (Taito-ku, Tokyo) and Egao no Mori Nursery School Asagaya (Suginami-ku, Tokyo). For thegrowth of value-added peripheral businesses, the after school care business started operations in the city of Osakaand now operates 11 after school care locations.
(2) Financial Position
Assets totaled 73,664 million yen at the end of 2019, a decrease of 2,285 million yen from the end of 2018.
Current assets increased 1,998 million yen to 42,293 million yen. The main factor was an increase of 5,562
million yen in cash and deposits while there were decreases of 1,677 million yen in notes and accounts
receivable-trade and 1,091 million yen in merchandise and finished goods. Non-current assets decreased 4,283
million yen to 31,370 million yen. The factors included decreases of 3,717 million yen in property, plant andequipment, 38 million yen in intangible assets and 527 million yen in investments and other assets.
Current liabilities decreased 8,674 million yen to 20,094 million yen. The main factors were decreases of 4,340
million yen in current portion of bonds with share acquisition rights, 1,624 million yen in accounts payable-otherand 1,341 million yen in accounts payable-trade. Non-current liabilities decreased 1,248 million yen to 11,078
million yen. The main factor was a decrease of 1,240 million yen in long-term loans payable.
Net assets increased 7,637 million yen to 42,490 million yen mainly due to booking of profit attributable toowners of parent of 8,182 million yen. As a result, the equity ratio was 57.7%.
Starting with the beginning of 2019, Senshukai has applied the “Partial Amendments to Accounting Standard forTax 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.
(3) Cash FlowsThe balance of cash and cash equivalents at the end of 2019 was 22,713 million yen, an increase of 5,566 million
yen from the end of 2018.
Operating activities provided net cash of 2,911 million yen (net cash used of 1,950 million yen in 2018). The main
cash inflow was profit before income taxes of 8,011 million yen. The main cash outflows include gain on sales
and retirement of non-current assets of 5,532 million yen.
Investing activities provided net cash of 8,685 million yen (net cash provided of 3,196 million yen in 2018). The
main cash inflows include proceeds from sales of property, plant and equipment of 8,529 million yen. The main

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SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019

cash outflows include 1,690 million yen for the purchase of property, plant and equipment.
Financing activities used net cash of 6,027 million yen (net cash used of 1,414 million yen in 2018). The main
cash outflows were 4,340 million yen for payment for redemption of bonds with share acquisition rights and 1,398
million yen for the repayments of long-term loans payable.
Cash flow indicesFiscal Year 2017
Fiscal Year 2018
Fiscal Year 2019
(As of Dec. 31, 2017) (As of Dec. 31, 2018) (As of Dec. 31, 2019)
Equity ratio (%)
45.9
45.8
57.7
Equity ratio based on fair value (%)
37.3
13.7
28.6
Ratio of interest-bearing debt to cash flows (years)
9.3
3.7
Interest coverage ratio (times)
12.6
23.1
Notes: 1. Cash flow indices are calculated, using consolidated financial figures, as follows:
The equity ratio is shareholders’ equity divided by total assets.
The equity ratio based on fair value is market capitalization divided by total assets.
The ratio of interest-bearing debt to cash flows is interest-bearing debt divided by the quantity of operating cash flows.
The interest coverage ratio is operating cash flows divided by interest payments.
2. Market capitalization is calculated by multiplying the closing share price at the end of the period by the number ofshares issued and outstanding at the end of the period, excluding treasury shares.
3. Interest-bearing debt includes short-term loans payable, long-term loans payable, and lease obligations shown on
the consolidated balance sheet.
4. Operating cash flows and interest payments represent net cash provided by (used in) operating acti vities andinterest expenses paid, respectively, on the consolidated statement of cash flows.
5. Ratio of interest-bearing debt to cash flows and interest coverage ratio are not shown for Fiscal Year 2018 because
operating cash flows were negative.

(4) Basic Policy Regarding Distribution of Earnings and Dividends in the Current and Next Fiscal Years
The Group’s basic policy is maintaining stable dividends, taking into consideration the payout ratio, and ensuring
a fair distribution of earnings to shareholders that reflects its business performance. There has been no dividendsince 2017 because of the decision to place priority on increasing equity from the standpoint of the stability andsoundness of business operations.
The Senshukai Group believes that major business structural reforms are needed in order to achieve a quick
recovery in sales and earnings and to stabilize business performance. To establish guidelines for these reforms, amedium-term management plan was announced in October 2018 that covers the three-year period ending in 2021.
Many activities are under way in accordance with this plan, primarily in the mail -order business.
There was no dividend forecast for 2019 in accordance with this basic policy. After taking into consideration 2019
results of operations, the outlook for the Group’s financial condition and other factors, the decision was made toresume dividend payments with a proposed year-end dividend of 2 yen per share.
For 2020, based on the outlook for results of operations, the financial condition and other items, we plan to pay
interim and year-end dividends of 2 yen each for a total annual dividend of 4 yen.
(5) Outlook
Consolidated
Net sales

Operating profit

Ordinary profit(Millions of yen)
Profit attributable toowners of parent
2,200

Fiscal Year 2020 (forecast)

92,000

1,800

2,000

Fiscal Year 2019 (results)

89,150

772

1,418

8,182

3.2

132.9

41.0

(73.1)

Change (%)

We forecast a 3% increase in net sales. The mail-order business is taking actions for attracting new members andencouraging current members to continue making purchases. This business will also increase activities to sell
highly appealing and innovative original merchandise.
We forecast an improvement in earnings despite the outlook for higher cost of logistics and other factors to exert
downward pressure on profitability. In the mail-order business, we expect benefits from operational reforms-4-

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019

implemented during 2019, including measures to increase the gross profit margin. We will also continue activities
for using selling expenses even more efficiently. In the bridal business and other businesses, we do not anticipate
a significant change from 2019 in earnings.
* The above projections are based on information available at the time of release of this report. Actual results could differ fromprojections due to a variety of factors.

(6) Important Information about Going Concern Assumption
In 2019, there was an operating profit of 772 million yen and a profit attributable to owners of parent of 8,182
million yen. In 2018, there was an operating loss of 4,063 million yen and a loss attributable to owners of parentof 6,027 million yen. These losses create significant doubts about the going concern assumption. To eliminate
these doubts and improve results of operations, business structural reforms centered on the mail-order businessare under way in accordance with a medium-term management plan that started in 2019 and will end in 2021.
In 2019, the first year of this plan, activities were focused on operational reforms in the mail -order business. One
initiative was the establishment and use of rules for maintaining the proper level of inventori es in order to reduce
opportunity loss and reduce the occurrence of surplus inventories. These activities structurally reduced theoccurrence of valuation losses and improved the gross profit margin. In addition, to reduce fixed expenses, we are
streamlining assets and the organization, such as by relocating the Osaka and Tokyo head offices and revising theorganizational structure.
To return to growth, we are reconfiguring our catalog-based customer model by shifting the basis of marketing
activities from merchandise categories to customer categories. We are using this new structure to start distributing
catalogs covering many merchandise categories in order to list merchandise in several categories that can
precisely match customers’ needs. To reinforce activities to attract more customers, we will use “#7 second hug”
TV and internet commercials centered on the new Belle Maison slogan “Love. Then Ideas.” This expresses thecommitment to creating ideas that originate from love.
All of these activities resulted in consolidated operating profit in 2019 that was higher than our forecast. We willcontinue to implement numerous measures to make improvements in order to build a solid base for earnings andreturn to growth backed by a recovery and stability in the performance of the Senshukai Group.
At the end of 2019, cash and deposits were 22,713 million yen. Senshukai also has a committed credit line withthe total amount of 10 billion yen with financial institutions. Consequently, we believe there are no concerns
about our liquidity because we have a sufficient amount of working capital.
For these reasons, we believe there are no significant uncertainties regarding the going concern assumption.
2. Basic Approach for the Selection of Accounting Standards
The Senshukai Group has a policy of preparing its consolidated financial statements using Japanese GAAP for thetime being to facilitate comparisons with prior-year performance and the performance of other companies in Japan.
We will take suitable actions with regard to the application of the International Financial Reporting Standards(IFRS) by taking into account trends in our industry peers in Japan and associated factors in Japan and othercountries.

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SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019

3. Consolidated Financial Statements and Notes(1) Consolidated Balance Sheet(Millions of yen)
Fiscal Year 2019
(As of Dec. 31, 2019)

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

17,15022,713

Notes and accounts receivable-trade

5,532

3,854

Merchandise and finished goods

9,732

8,641

186

197

Accounts receivable-other

6,110

5,285

Other

1,716

1,750

Allowance for doubtful accounts

(133)

(148)

40,29542,29337,93535,004

Accumulated depreciation(24,329)(23,300)

Buildings and structures, net

13,606

11,703

Machinery, equipment and vehicles

6,691

6,703

(6,400)(6,444)290

258

Tools, furniture and fixtures

2,351

2,291

Accumulated depreciation(2,036)(1,966)

314

324

8,477

6,809

Raw materials and supplies

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

Accumulated depreciation
Machinery, equipment and vehicles, net

Tools, furniture and fixtures, net
Land
Leased assets

652

629

Accumulated depreciation

(373)

(386)

Leased assets, net

279

242

Construction in progress95

7

23,063

19,346

1,736

1,483

729

944

2,466

2,427

6,458

6,046

692

600

1,888

1,614

230

744

Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Leasehold and guarantee deposits
Deferred tax assets
Other

1,035

734

Allowance for doubtful accounts

(180)

(143)

Total investments and other assets

10,1239,596

35,65331,37075,94973,664

Total non-current assets
Total assets-6-

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019

(Millions of yen)
Fiscal Year 2019
(As of Dec. 31, 2019)

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

6,631

6,523

Accounts payable-trade

4,836

3,495

Short-term loans payable

1,468

1,240

Current portion of bonds with share acquisition rights

4,340

-

Lease obligations

112

118

Accounts payable-other

6,708

5,083

Accrued expenses

1,200

1,005

Income taxes payable

318

107

Accrued consumption taxes

66

273

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

305

225

-

23

291

233

Other

2,488

1,763

Total current liabilities

28,76820,094Non-current liabilities
Long-term loans payable

9,799

8,558

Lease obligations

918

806

Deferred tax liabilities

530

722

Deferred tax liabilities for land revaluation

74-

Retirement benefit liability
Provision for share-based remuneration for directors(and officers)
Asset retirement obligations

69

3

2

-

778

851

Other

153

135

Total non-current liabilities

12,327

11,07841,096

31,173

Capital stock

22,304100

Capital surplus

23,71239,544Retained earnings(3,526)

10,891

Total liabilities
Net assets
Shareholders’ equity

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

35,55843,736

Valuation difference on available-for-sale securities

605

366

Deferred gains or losses on hedges

60

49(1,346)(1,516)

(61)

(120)

Accumulated other comprehensive income

Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans

(47)

(24)

Total accumulated other comprehensive income(789)(1,245)84-

34,85342,49075,94973,664Non-controlling interests
Total net assets
Total liabilities and net assets-7-

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income(Consolidated Statement of Income)Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Freightage and packing expenses
Promotion expenses
Provision for allowance for sales promotion expenses
Provision of allowance for doubtful accounts
Bad debts expenses
Remuneration for directors (and other officers)
Salaries and allowances
Bonuses
Provision for bonuses for directors (and other officers)
Provision for bonuses
Depreciation
Other
Total selling, general and administrative expenses
Operating profit (loss)
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity
methodGain on adjustment of account payable
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity
methodCommission expenses
Miscellaneous loss
Total non-operating expenses
Ordinary profit (loss)
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates
Subsidy income
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Loss on reduction of non-current assets
Impairment loss
Loss on sales of shares of subsidiaries and associates
Business structure reform expenses
Loss on liquidation of termination of deposit account
Other
Total extraordinary losses
Profit (loss) before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
Profit (loss)
Profit attributable to non-controlling interests
Profit (loss) attributable to owners of parent

Fiscal Year 2018
(Jan. 1, 2018 – Dec. 31, 2018)
113,344
65,01948,325(Millions of yen)
Fiscal Year 2019
(Jan. 1, 2019 – Dec. 31, 2019)89,15043,96945,1806,179
11,283
305
117
317
8,515
494
553
1,758
22,862
52,388(4,063)

4,934
9,978
225
111
15
190
6,377
1,371
23
184
1,806
19,18744,408
772

29
60

23
35

-

421

271
220
582

255
183
919

145

126

27

-

518
105
796
(4,277)

38
107
273
1,418

25
517
46
590

5,623
936
336
336
7,232

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

90
311
24
4
165
42
639
8,011
165
(336)
(171)
8,182
8,182

-8-

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019

(Consolidated Statement of Comprehensive Income)Fiscal Year 2018
(Jan. 1, 2018 – Dec. 31, 2018)(6,018)(Millions of yen)
Fiscal Year 2019
(Jan. 1, 2019 – Dec. 31, 2019)
8,182

Valuation difference on available-for-sale securities

(611)

(239)

Deferred gains or losses on hedges

(171)

(7)

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

(13)

5

(22)

(44)

Total other comprehensive income

(818)

(285)

(6,836)

7,896(6,846)

7,896

9

-

Profit (loss)
Other comprehensive income

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

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019(3) Consolidated Statement of Changes in Equity
Fiscal Year 2018 (Jan. 1, 2018 – Dec. 31, 2018)(Millions of yen)
Shareholders’ equity
Retained
Treasury sharesearnings

Total shareholders’equityCapital stock

Capital surplus

22,30423,860

3,500

3,500

7,000

(75)

(75)

3,500

-

Balance at beginning of current
periodChanges of items during period
Issuance of new shares
Dividends of surplus-othercapital surplus
Transfer to other capitalsurplus from capital stock
Loss attributable to owners ofparentDeficit disposition(3,500)(4,859)(149)

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

7,071

Purchase of treasury shares
Disposal of treasury shares
Reversal of revaluation reserve
for landNet changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of current period(6,027)

0(6,785)(6,785)

2

2

289

289

-

(147)

1,333

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

Accumulated other comprehensive income
Total
NonValuation
DeferredForeign
Revaluation
Remeasurements accumulated controlling Total net
difference on gains orcurrency
assetsreserve forof defined
otherinterests
available-for- losses ontranslation
land
benefit plans comprehensive
sale securities hedges
adjustment
incomeBalance at beginningof current period
Changes of items
during period
Issuance of newsharesDividends ofsurplus-othercapital surplus
Transfer to othercapital surplus from
capital stock
Loss attributable toowners of parent
Deficit disposition
Purchase oftreasury shares
Disposal oftreasury shares
Reversal ofrevaluation reserve
for landNet changes of
items other thanshareholders’equityTotal changes of
items during period
Balance at end ofcurrent period

1,216

219

(1,056)

(40)

(19)

318

74

41,5487,000(75)(6,027)(6,785)
2
289

(610)

(158)

(289)

(20)

(28)

(1,108)9(1,098)

(610)

(158)

(289)

(20)

(28)

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

60(1,346)

(61)

(47)

(789)

84

34,853- 10 -SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019

Fiscal Year 2019 (Jan. 1, 2019 – Dec. 31, 2019)(Millions of yen)
Capital stock

Capital surplus

22,30423,712

Balance at beginning of current
periodChanges of items during period
Dividends of surplus-othercapital surplus
Transfer to other capitalsurplus from capital stock
Profit attributable to owners ofparentDeficit disposition(22,204)

Shareholders’ equity
Retained
Treasury sharesearnings(3,526)(6,932)35,558

(175)

(175)

22,204-(6,065)

8,182

8,182

6,065

-

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

Total shareholders’equity

(131)

(0)

(0)

132

1

169

169

(22,204)

15,832

14,418

132

8,177

100

39,544

10,891(6,800)43,736(Millions of yen)

Accumulated other comprehensive income
Total
NonValuation
DeferredForeign
Revaluation
Remeasurements accumulated controlling Total net
difference on gains orcurrency
assetsreserve forof defined
otherinterests
available-for- losses ontranslation
land
benefit plans comprehensive
sale securities hedges
adjustment
incomeBalance at beginningof current period
Changes of items
during period
Dividends ofsurplus-othercapital surplus
Transfer to othercapital surplus from
capital stock
Profit attributableto owners of parent
Deficit disposition
Purchase oftreasury shares
Disposal of treasury
shares
Reversal ofrevaluation reserve
for landNet changes of
items other thanshareholders’ equity
Total changes of
items during period
Balance at end ofcurrent period

605

60

(1,346)

(61)

(47)

(789)

84

34,853

(175)
8,182
(0)
1
169
(238)

(10)

(169)

(59)

22

(455)

(84)

(539)

(238)

(10)

(169)

(59)

22

(455)

(84)

7,637

366

49

(1,516)

(120)

(24)

(1,245)-42,490- 11 -SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019(4) Consolidated Statement of Cash Flows(Millions of yen)
Fiscal Year 2019
(Jan. 1, 2019 –Dec. 31, 2019)

Fiscal Year 2018
(Jan. 1, 2018 –Dec. 31, 2018)
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 sales promotion expenses
Increase (decrease) in provision for bonuses
Interest and dividend income
Interest expenses
Share of (profit) loss of entities accounted for using equity method
Loss (gain) on sales of investment securities
Loss (gain) on sales of shares of subsidiaries and associates
Loss (gain) on sales and retirement of non-current assets
Loss on reduction of non-current assets
Subsidy income
Business restructuring expenses
Loss on liquidation of termination of deposit accountDecrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes (paid) refund
Payments for business restructuring expenses
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Proceeds from subsidy income
Proceeds from withdrawal of time deposits
Purchase of investment securities
Proceeds from sales of investment securities
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
Proceeds from long-term loans payable
Repayments of long-term loans payable
Payment for redemption of bonds with share acquisition rights
Proceeds from issuance of common shares
Purchase of treasury shares
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 12 -(6,016)
1,807
489
(98)
(102)
(290)
(90)
145
27
(516)
10
46
(46)
1,459
273
(100)
6,778
1,334
(3,588)(1,333)
29
219
107
(145)
(172)
(1,960)(1,950)

8,011
1,879
24
(3)
(79)
(56)
(58)
126
(421)
(918)
(331)
(5,532)
311
(336)
165
1,025
564
631
(795)
(439)
790
4,556
89
(126)
(196)
(1,410)2,911(1,997)
2,527
(570)
46
2,226
(138)
849

(1,690)
8,529
(523)
336
(50)
1,460

-

(186)

-

398

252
3,196

411
8,685

10
600
(1,371)(653)
6,975(6,785)(77)(112)(1,414)(8)(176)
17,323
17,147(1,398)(4,340)
(0)
(175)
(112)
(6,027)(3)
5,566
17,14722,713SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Additional Information
Performance-linked Stock Compensation Plan for Directors and Executive Officers
Senshukai had a stock compensation plan for directors (excluding outside directors) and executive officers that is
linked to the company’s performance. The plan covered the period of three years from the end of December 2016
to the end of December 2018. 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 stockthat were held by the trust were cancelled on June 21, 2019.
Segment Information
1. Overview of reportable segment
Segments used for financial reporting are Senshukai’s constituent units for which separate financial information
is available and for which the Board of Directors performs periodic studies for the purposes of determining theallocation of resources and evaluating performance.
The Senshukai Group primarily operates the mail-order business, bridal business, corporates business andinsurance and credit card business, and Senshukai and its group companies manage each of these businesses
according to these classifications.
Therefore the Group, comprised of these different business segments, has four reportable segments: themail-order business, bridal business, corporates business and insurance and credit card business.
The mail-order business is engaged in mail-order sales via a variety of media centered on catalogs and theInternet. The bridal business provides mostly house wedding services. The corporates business uses Senshukai’s
infrastructure to provide solutions services and promotional services targeting mail-order companies ande-commerce businesses. The insurance and credit card business provides insurance and credit card services
primarily to Belle Maison members.
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 from 2019.
The segment information for 2018 is prepared and disclosed based on the reportable segment classification after
the change.
2. Calculation methods for sales, profit or loss, assets, and other items for each reportable segment
The accounting methods for reportable segments are the same as those used for preparing the consolidated
financial statements.
Profits (loss) for reportable segments are generally operating profit (loss) figures.
Inter-segment sales or transfers are based on market prices.

- 13 -SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019

3. Information related to sales and profit or loss, assets, and other items for each reportable segment
Fiscal Year 2018 (Jan. 1, 2018 – Dec. 31, 2018)
Reportable segment
Insurance
OthersMail-order Bridal Corporates and credit
Sub-total (Note 1)
business business businesscardbusiness

Total(Millions of yen)Amounts
shown onAdjustment consolidated(Note 2)
financialstatements(Note 3)

Net sales
Sales to customers
Inter-segment sales
or transfers
Total

86,452

19,386

5,161

627

111,628

1,715

113,344-

113,344

1,015

0

168

0

1,184

51

1,236

(1,236)-87,46819,386

5,330

628

112,813

1,767

114,581(1,236)113,344

Segment profit (loss)(5,633)

1,004

339

256

(4,032)(31)(4,063)0(4,063)

Segment assets

53,006

21,192872

441

75,512

1,741

77,254(1,305)75,949Other items
Depreciation
771
966
21
0
1,759
48
1,807
1,807
Amortization of
216
216
40
256
256
goodwill
Investment inequity-method
610
3,265
3,876
3,876
3,876
affiliates
Increase in property,
plant and equipment
916
1,894
10
2,821
241
3,062
3,062
and intangible assets
Notes: 1. Others represent the businesses which are not included in any of the four reportable segments and consist of the childcare
support business and manufacturing and sales of cosmetics.
2. Adjustments are as follows.
(1) The 0 million yen adjustment to segment profit (loss) is an elimination for inter-segment transactions.
(2) The (1,305) million yen adjustment to segment assets is an elimination for inter-segment transactions.
3. Segment profit (loss) is adjusted to be consistent with the operating loss on th e consolidated statement of income.

- 14 -SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019

Fiscal Year 2019 (Jan. 1, 2019 – Dec. 31, 2019)(Millions of yen)Amounts
shown onAdjustment consolidated(Note 2)
financialstatements(Note 3)

Reportable segment
Insurance
OthersMail-order Bridal Corporates and credit(Note
1)
Sub-total
business business businesscardbusiness

Total

Net sales
Sales to customers
Inter-segment sales
or transfers
Total

61,30020,6764,757

574

87,3091,841

89,150-89,150

1,137

0

0

-

1,138

0

1,139

(1,139)-62,43820,6774,758

574

88,448

1,841

90,289(1,139)89,150

Segment profit (loss)

(805)

971

358

307

832

(60)

771

0

772

51,226

21,067801

84

73,1801,719

74,900(1,235)73,664

Segment assets
Other items

Depreciation
604
1,195
18
0
1,818
60
1,879
1,879
Amortization of
212
212
40
253
253
goodwill
Investment inequity-method
608
3,717
4,326
4,326
4,326
affiliates
Increase in property,
plant and equipment
610
962
33
1,606
316
1,922
1,922
and intangible assets
Notes: 1. Others represent the businesses which are not included in any of the four reportable segments and consist of the childcare
support business and manufacturing and sales of cosmetics.
2. Adjustments are as follows.
(1) The 0 million yen adjustment to segment profit (loss) is an elimination for inter-segment transactions.
(2) The (1,235) million yen adjustment to segment assets is an elimination for inter-segment transactions.
3. Segment profit (loss) is adjusted to be consistent with the operating profit on the consolidated statement of income.

4. Information related to impairment of non-current assets for each reportable segment
Fiscal Year 2018 (Jan. 1, 2018 – Dec. 31, 2018)
Mail-orderbusiness
Impairment loss

476

Bridalbusiness
10(Millions of yen)
Insurance andcredit cardbusiness

Corporates
business-

Fiscal Year 2019 (Jan. 1, 2019 – Dec. 31, 2019)
Detailed explanations are omitted due to immateriality of the amount.

- 15 -

3

Eliminationor corporate

Others
-

-

Total
489

SENSHUKAI CO.,LTD. (8165) Financial Results for Fiscal Year 2019

Per Share Information

Net assets per share

Fiscal Year 2018
(Jan. 1, 2018 – Dec. 31, 2018)
689.05(Yen)
Fiscal Year 2019
(Jan. 1, 2019 – Dec. 31, 2019)
880.56(136.75)

201.11

Net income (loss) per share

152.54
Diluted net income per share
Notes: 1. Diluted net income per share in Fiscal Year 2018 is not presented since Senshukai has outstanding dilutive securities,
though posted a net loss.
2. Senshukai’s stock held by the executive stock compensation trust is included in treasury shares, which are deducted fromthe number of shares outstanding at the end of the period for the calculation of net assets per share in Fiscal Year 2018(deduction of 174,000 shares in Fiscal Year 2018). In addition, this trust stock is included in treasury shares, which are
deducted from the average number of shares outstanding during the period for the calculation of net income (loss) per
share and diluted net income per share (deduction of 177,000 shares in Fiscal Year 2018 and 81,000 shares in Fiscal Year2019).
In addition, on April 19, 2019, the Board of Directors approved a resolution to terminate the stock compensation plan thatis linked to results of operations. As a result, 173,400 shares of Senshukai stock that were held by the trust werecancelled on June 21, 2019.
3. Basis for calculation of net income (loss) per share is as follows.
(Millions of yen)
Fiscal Year 2018
Fiscal Year 2019
(Jan. 1, 2018 – Dec. 31, 2018)(Jan. 1, 2019 – Dec. 31, 2019)
Net income (loss) per share
Profit (loss) attributable to owners of parent
Amounts unavailable to common shareholders[Including: dividends for Class A preferred stock]
Profit (loss) attributable to owners of parent related tocommon stock
Average number of shares outstanding during the period(thousand shares)(6,027)

8,182

-

100

[ -]

[100]

(6,027)

8,082

44,08040,191

Diluted net income per share
Adjustment to profit attributable to owners of parent--

Increase in number of common stock (thousand shares)-

12,797[Including: share acquisition rights (thousand shares)][Including: dividends for Class A preferred stock(thousand shares)][Including: dividends for Class B preferred stock(thousand shares)]
Number of residual securities with no dilution excluded
from calculation of diluted net income per share

[ -]

[ -]

[ -]

[4,570][ -][8,226]--Significant Subsequent Events
Not applicable.

* 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.

- 16 -