Summary of Financial Results for the Second Quarter of Fiscal Year 2020
(Six Months Ended June 30, 2020)[Japanese GAAP]
July 30, 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, Director, General Manager, Corporates Headquarters
Tel: +81-6-6881-3220
Scheduled date of filing of Quarterly Report: August 12, 2020
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)
Stock code:
Representative:
Inquiries:(All amounts are rounded down to the nearest millions of yen)

1. Consolidated Financial Results for the 2nd Quarter of 2020 (January 1, 2020 – June 30, 2020)(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%

Millions of yen%

Millions of yen%

2Q 2020
42,226(3.8)(563)
2Q 2019
43,888 (23.3)
559
Note: Comprehensive income (millions of yen) 2Q 2020: (3,148) (-%)

Millions of yen%-(2,898)1,120
2Q 2019: 7,336 (-%)

(3,000)7,900-

Net income per share
2Q 2020
2Q 2019

Diluted net income per share

Yen

Yen

(74.66)
196.58149.10(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen

2Q 2020
71,442
39,164
Fiscal Year 201973,66442,490
Reference: Shareholders’ equity (millions of yen) 2Q 2020: 39,164

Net assets per share
%

Yen

54.8
57.7
Fiscal Year 2019: 42,490

800.29880.56

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

Yen

Year-end

Yen

Total
Yen

Fiscal Year 2019
0.00
2.00
Fiscal Year 2020
0.00
Fiscal Year 2020 (forecasts)
Notes: 1. Revision to the most recently announced dividend forecast: None
2. The year-end dividend forecast for the Fiscal Year 2020 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

2.00
-

3. Consolidated Outlook for Fiscal Year 2020 (January 1, 2020 – December 31, 2020)
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% Millions of yen%

Full Year 2020
Notes: 1. Revision to the most recently announced consolidated outlook: None
2. The consolidated outlook for the Fiscal Year 2020 has not been determined because it is not possible to establish areliable forecast at this time.

Yen-

* 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 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: 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 2020:52,056,993 sharesFiscal Year 2019:52,056,993 sharesFiscal Year 2019:11,865,448 shares

2Q 2019:

40,191,571 shares

2) Number of treasury shares at the end of the period
2Q 2020:

11,865,534 shares

3) Average number of shares outstanding during the period
2Q 2020:

40,191,459 shares

Note: 173,400 shares of Senshukai stock, which were held by the trust for the stock compensation plan that is linked toresults of operations and cancelled on June 21, 2019, are included in the number of treasury shares, and is deductedfrom the number of shares that is used to calculate the average number of shares outstanding during 2Q 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 page4, “1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecasts
and Other Forward-looking Statements.”(How to view the financial results meeting webcast and supplementary materials)
Senshukai plans to distribute the financial results meeting webcast on the Senshukai website on August 3, 2020. Materials to be
used at the meeting will be disclosed using the Timely Disclosure network (TDnet) and available on the Senshukai website.

(Reference) Dividends of classified stock
Dividends per share for classified stock with rights that differ from those of common shares are shown below.
On July 31, 2020, Senshukai plans to purchase all of the following classified stock pursuant to Article 178 of theCompanies Act by exercising its right to acquire this stock for a cash payment. More information about this purchaseis in the press release dated today titled “Notice of Change in Investment Contract with Class A and B Preferred
Shareholders, Acquisition and Retirement of Class A and B Preferred Stock, Change in Use of Proceeds from
Issuance of Class A and B Preferred Stock, and Change in Officers.”
Class A preferred stock

1Q-endDividend per share
3Q-end2Q-endYen

Yen

Year-end

Yen

Fiscal Year 2019
20,000,000.00
Fiscal Year 2020
0.00
Fiscal Year 2020 (forecasts)
Notes: 1. Five shares of the Class A preferred stock were issued on March 30, 2018.

Total
Yen

Yen

-

20,000,000.00

40,000,000.00

-

-

0.00

2. The dividends for the Fiscal Year 2019 were partially paid from the capital surplus. Please see “Breakdown ofdividends paid from the capital surplus” below for more information.
Class B preferred stock

1Q-endDividend per share
3Q-end2Q-endYen

Yen

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

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 is 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

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(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statement s) 10(Additional Information)

10(Segment Information)

11(Significant Subsequent Events)

12

3. Other
Important Information about Going Concern Assumption

13
13

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first half of 2020, the global spread of COVID-19 had a severe impact on consumer spending and economic
activity in Japan. Due to this pandemic, the outlook for the Japanese and global economies is becoming
increasingly uncertain.
In Japan’s retail industry, there was a big downturn in consumer spending as people were asked to stay home
unless absolutely necessary and commercial facilities and other stores reduced hours or temporarily closed
because of COVID-19. Consumer spending may decline even more because the inability to predict the end of thiscrisis is likely to make consumer sentiment even more negative. Consequently, the current slump in consumption
may continue for a long time. This crisis is significantly altering the structure of composition. Consumer spendingthat involves visiting stores and other outings has declined and events attended by large numbers of peop le areimpossible. These activities are being replaced by “stay-at-home consumption” and other new consumption
patterns. The retail industry must therefore determine the best ways to adapt to this shift in the structure of
consumer spending.
In the mail-order business, improvements are steadily emerging in the first half due to the benefits of businessstructural reforms based on the current medium-term management plan. For example, substantial investments for
activities to attract customers have been successful and constant operational reforms have increased the grossprofit margin. This business also benefited from new categories of demand linked with the need for people to stayhome. The result was higher sales and earnings in the mail-order business. In the bridal business, sales fell sharply
because of the enormous change in the business climate caused by increasing concerns about COVID -19. A large
number of weddings and receptions scheduled for the second quarter of 2020 were postponed.
Net sales in the first half of 2020 were down 3.8% year-over-year to 42,226 million yen. There was an operating
loss of 563 million yen compared with an operating profit of 559 million yen in the first half of 2019. Ordinary
loss was 2,898 million yen compared with a profit of 1,120 million yen one year earlier due to the share of loss ofentities accounted for using the equity method. The loss attributable to owners of parent was 3,000 million yen
compared with a profit of 7,900 million yen in the first half of 2019, when a gain on sales of non-current assets, again on sales of investment securities and other items were recorded as extraordinary income. Due to thisdownturn in sales and earnings, all directors and members of the Audit & Supervisory Board have stated the ir
intention of voluntarily returning part of their officer remuneration for a period of three months.
Business segment performance was as follows.
(Mail-order Business)
Consolidated sales in the mail-order business, which is primarily the catalog and the Internet businesses,
increased 11.8% year-over-year to 34,650 million yen in the first half. There was an operating profit of 1,215
million yen compared with a profit of 32 million yen in the first half of 2019.
In the first half of 2020, there were many activities to rebuild the customer base, such as by contacting customers
who have not made a purchase for a certain length of time. These activities succeeded at stopping the decline in
the number of customers in the core Belle Maison business and attracting more customers. Several other factors
also contributed to the improvement in first half performance. Operational reforms reduced expenses andproduced other benefits and there was more consumer spending involving the need to stay home because of
COVID-19. In addition, sales of furniture and household products associated with remote work increased as themerchandise lineup was optimized from the standpoint of customers in order to meet this new category of demand .
The result was sales and earnings that were much higher than one year earlier.
(Bridal Business)
Consolidated sales in the bridal business, centered on the house wedding business, decreased 59.2%
year-over-year to 3,902 million yen. There was an operating loss of 2,142 million yen compared with a profit of

301 million yen in the first half of 2019.
The big downturns in sales and earnings were caused by the severe impacts of wedding and reception
postponements and the suspension of most sales activities because of COVID-19. The bridal business will focus
on measures to cut costs for the time being because the effects of this crisis will probably continue until the
pandemic comes to an end. Furthermore, to improve the performance of this business, there will also be activities
such as rigorous cleaning of wedding and reception facilities and measures to meet new needs of couples in order
to continue operating during the COVID-19 crisis.
(Corporates Business)
Consolidated sales in the corporates business, which provides products and services to corporations, increased
14.1% year-over-year to 2,537 million yen. Operating profit increased 49.8% to 251 million yen.
During the first half, this business focused on adding new customers and increasing sales to current customers.
This resulted in acquisition of new customers in novelties business and higher sales in the sampling business,
which provides services such as attaching direct mail marketing messages to packages used to deliver products,
making a big contribution to the sales growth of this business.
(Insurance and Credit Card Business)
This business provides information mainly to Belle Maison members about insurance policies and about credit
cards with the best reward points. Consolidated sales decreased 27.0% year-over-year to 200 million yen andoperating profit decreased 35.9% to 93 million yen.
In the insurance business, we reviewed our channels for sales activities and started using new sales methods
during the first half, such as coordination with the bridal business and activities targeting families raising children.
However, sales and earnings decreased because we did not conduct sales activities due to COVID-19. Sales
activities gradually restarted after the state of emergency was lifted, but the number of new customers willprobably decrease due to the inability to conduct face-to-face consultations, hold insurance seminars and use othersales activities with direct customer contact until this crisis ends.
(Others)
Consolidated sales in other businesses, which include childcare support business and manufacturing and sales ofcosmetics, increased 10.1% year-over-year to 935 million yen. There was an operating profit of 16 million yen
compared with a loss of 88 million yen in the first half of 2019.
In the childcare support business, the two nursery schools that opened in April 2019 as well as the after school
child care business, which was started as a peripheral business for more added value, are all performing well.
(2) Explanation of Financial Position(Balance sheet position)
Assets totaled 71,442 million yen at the end of the second quarter of 2020, a decrease of 2,221 million yen fromthe end of 2019.
Current assets increased 746 million yen to 43,040 million yen. The main factor was an increase of 2,957 million
yen in cash and deposits, while there were decreases of 1,264 million yen in merchandise and finished goods, 386
million yen in accounts receivable-other, and 354 million yen in other. Non-current assets decreased 2,967 million
yen to 28,402 million yen. The factors included decreases of 531 million yen in property, plant and equipment and2,743 million yen in investments and other assets, while there was an increase of 306 million yen in intangible
assets.
Current liabilities increased 427 million yen to 20,522 million yen. The main factor was an increase of 2,965
million yen in short-term borrowings, while there was a decrease of 2,516 million yen in other. Non-current

liabilities increased 676 million yen to 11,755 million yen. The main factor was an increase of 806 million yen in
long-term borrowings.
Net assets decreased 3,326 million yen to 39,164 million yen mainly due to booking of loss attributable to ownersof parent of 3,000 million yen. As a result, the equity ratio was 54.8%.
(Cash flow position)
The balance of cash and cash equivalents at the end of the second quarter of 2020 was 25,671 million yen, an
increase of 2,957 million yen from the end of 2019.
Operating activities provided net cash of 113 million yen (net cash provided of 1,443 million yen in the same
period of 2019). The main cash inflows were share of loss (profit) of entities accounted for using equity method of
2,369 million yen and a decrease in inventories of 1,216 million yen. The main cash outflows include loss before
income taxes of 2,946 million yen.
Investing activities used net cash of 681 million yen (net cash provided of 8,991 million yen in the same period of2019). The main cash outflows include 548 million yen for the purchase of intangible assets.
Financing activities provided net cash of 3,533 million yen (net cash used of 5,228 million yen in the same periodof 2019). The main cash inflows were net increase in short-term borrowings of 3,000 million yen and proceeds of
1,450 million yen from long-term borrowings The main cash outflows include 677 million yen for the repaymentsof long-term borrowings.
(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements
The outlook remains uncertain because there are still no signs of an end to the COVID -19 pandemic. This crisis ishaving a severe impact on the bridal business. A large number of weddings and receptions scheduled for thesecond quarter of 2020 were postponed to the second half of 2020 or 2021. In addition, the bridal business has
reduced operating hours or temporarily closed some locations. Sales activities in this business resumed after thenationwide state of emergency in Japan was lifted on May 25. However, the forecast for 2020 remains undecided
because the duration of the pandemic is still unknown and it is impossible to determine a reliable estimate of the
impact of this crisis on the performance of the bridal business. We will monitor upcoming events involving
COVID-19 and make an announcement when it becomes possible to determine a revised forecast for 2020.

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Millions of yen)
2Q 2020(As of Jun. 30, 2020)

Fiscal Year 2019
(As of Dec. 31, 2019)
AssetsCurrent assets
Cash and deposits

22,71325,671

Notes and accounts receivable-trade

3,854

3,614

Merchandise and finished goods

8,641

7,376

Accounts receivable-other

5,285

4,899

Other

1,947

1,592

Allowance for doubtful accounts

(148)

(114)

42,29343,040

Buildings and structures, net

11,703

11,189

Land

6,809

6,809

833

815

19,346

18,814

1,483

1,373

944

1,360

2,427

2,734

Investment securities

6,046

3,388

Other

3,694

3,584

Allowance for doubtful accounts

(143)

(120)

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

Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets

Total investments and other assets
Total non-current assets
Total assets

9,596

6,853

31,37028,40273,66471,442

(Millions of yen)
2Q 2020(As of Jun. 30, 2020)

Fiscal Year 2019
(As of Dec. 31, 2019)
Liabilities
Current liabilities
Electronically recorded obligations-operating

6,523

7,090

Accounts payable-trade

3,495

3,078

Short-term borrowings

1,240

4,205

Income taxes payable

107

45

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

225

205

23

-

233

168

Other

8,244

5,727

Total current liabilities

20,094

20,522

Non-current liabilities
Long-term borrowings

8,558

9,365

Retirement benefit liability

3

4

Asset retirement obligations

851

854

Other

1,665

1,531

Total non-current liabilities

11,07811,75531,17332,277

Total liabilities
Net assets
Shareholders’ equity
Share capital

100

100

Capital surplus

39,54439,544Retained earnings

10,891

7,713

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

43,73640,557366

235

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

49

20(1,516)(1,516)

Foreign currency translation adjustment

(120)

(133)

Remeasurements of defined benefit plans

(24)

-

(1,245)(1,392)42,49039,16473,66471,442

Revaluation reserve for land

Total accumulated other comprehensive income
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 2019(Jan. 1, 2019 – Jun. 30, 2019)(Millions of yen)
2Q 2020(Jan. 1, 2020 – Jun. 30, 2020)

Net sales

43,88842,226

Cost of sales

21,902

20,899Gross profit

21,986

21,327

Selling, general and administrative expenses

21,426

21,890559(563)Interest income

1211

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

22

28

448

-

141

115

0

58

Operating profit (loss)
Non-operating income

Reversal of allowance for doubtful accounts
Other

69

59

Total non-operating income

693

273

66

62

-

2,369

21

15

Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity
methodCommission expenses
Other

44

160

Total non-operating expenses

132

2,608

1,120

(2,898)Gain on sales of non-current assets

5,619

-

Gain on sales of investment securities

926-

Gain on sales of shares of subsidiaries and associates

336-

Subsidy income

255

18

-

13

7,138

32

57

3

230

18

Ordinary profit (loss)
Extraordinary income

Gain on change in equity
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Loss on tax purpose reduction entry of non-current
assetsImpairment loss

1

5

-

38

Loss on sales of shares of subsidiaries and associates

4-

Business structure reform expenses

18-

Loss on disaster

0

14

Other

2

-

Total extraordinary losses

316

80

Profit (loss) before income taxes

Loss on valuation of investment securities

7,942(2,946)

Income taxes

42

53

Profit (loss)

7,900(3,000)

Profit (loss) attributable to owners of parent

7,900(3,000)(Quarterly Consolidated Statement of Comprehensive Income)(For the Six-month Period)
2Q 2019(Jan. 1, 2019 – Jun. 30, 2019)(Millions of yen)
2Q 2020(Jan. 1, 2020 – Jun. 30, 2020)

7,900(3,000)

Valuation difference on available-for-sale securities

(377)

(128)

Deferred gains or losses on hedges

(67)

(20)

2

4

(121)

(3)

(564)

(147)

7,336

(3,148)

7,336(3,148)

Profit (loss)
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

(3) Quarterly Consolidated Statement of Cash Flows
2Q 2019(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 loss (profit) of entities accounted for using equity
methodLoss (gain) on sales and retirement of non-current assets
Loss on tax purpose reduction entry of non-current assets
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Subsidy income
Business structure reform expenses
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in trade payables
Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividends received
Interest 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
Subsidies received
Purchase of investment securities
Proceeds from sales of investment securities
Payments for sales of shares of subsidiaries resulting inchange in scope of consolidation
Proceeds from sales 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
Payment for redemption of bonds with subscription rights
of shares
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(Millions of yen)
2Q 2020(Jan. 1, 2020 – Jun. 30, 2020)

7,942
926
1
(22)
(113)

(2,946)
893
5
(57)
(64)

(54)

(20)

(34)
66

(39)
62

(448)

2,369

(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

3
18
38
(18)
254
1,216
622
335
(2,694)
132
111
84
(61)
(6)
(13)
113

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

(299)
0
(548)
18
(15)
-

(186)

-

398

-

250
8,991

162
(681)

(756)

3,000
1,450
(677)

(4,340)

-

(75)
(56)
(5,228)

(179)
(58)
3,533

(3)

(7)

5,202
17,14722,3492,957
22,71325,671

(4) Notes to Quarterly Consolidated Financial Statements(Going Concern Assumption)
Not applicable.
(Significant Changes in Shareholders’ Equity)
Not applicable.
(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 theapplication of tax effect accounting with respect to profit before income taxes for the fiscal year that includes theapplicable 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.
(Additional Information)(Uncertainty of accounting estimates)
The bridal business has reduced operating hours or temporarily closed some locations in order to prevent the
spread of COVID-19 in accordance with requests to stay home and other provisions of the declaration of the stateof emergency of the Japanese government and in response to the increasing number of COVID-19 infections inJapan. Although the bridal business resumed sales activities following the lifting of the state of emergency on
May 25, the level of activity in this business is unlikely to return to the pre-crisis level soon.
Based on information that is currently available and other factors, the Senshukai Group is using the assumptionthat the COVID-19 crisis will continue to affect business operations until the end of 2020 for the determinationof accounting estimates for the impairment of non-current assets, the recoverability of deferred tax assets andother items.

(Segment Information)
I 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 impairment of non-current assets, goodwill, etc. for each reportable segment
No major events or changes occurred.
II 2Q 2020 (Jan. 1, 2020 – Jun. 30, 2020)
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
34,650
3,902
2,537
200
41,290935
42,22642,226
Inter-segment
134
3
38
176
0
176
(176)
sales or transfers
Total
34,785
3,906
2,575
200
41,467935
42,403(176)
42,226
Segment profit
1,215(2,142)
251
93
(581)
16
(564)
1
(563)
(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 1 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.

(Significant Subsequent Events)(Purchase and cancellation of Class A preferred stock and Class B preferred stock)
On July 30, 2020, the Senshukai Board of Directors approved a resolution to purchase Senshukai Class A andClass B preferred stock and, assuming the stock is purchased, cancel this stock in accordance with Article 17 8 of
the Companies Act. All shares of these two classes of preferred stock were purchased and canceled on July 31,
2020.
1. Reason for purchase and cancellation
In March 2018, Senshukai started to receive substantial assistance for rebuilding business operations from an
investment fund for the revitalization of core regional companies that is managed by REVIC Partners Co., Ltd. as
the unlimited liability partner. Assistance included 1) financial support by purchasing the Class A and Class B
preferred stock, 2) support by providing personnel to Senshukai, and 3) support involving the determination ofstrategies. There has been steady progress since then in accordance with a medium-term management planestablished by Senshukai. Due to these activities, Senshukai became profitable on a consolidated basis in 2019,
which was earlier than initially planned. In 2020, the first half operating loss was held to 563 million yen despite
the big downturn in the performance of the bridal business because of COVID -19. Performance was supported
by a large increase in the sales and earnings of the mail-order business resulting from structural reforms. Basedon the belief that significant progress has been made with rebuilding business operations, management made thedecision to purchase and cancel the Class A and Class B preferred stock. One reason is to make decisions fasterand increase the flexibility of equity policies in order to advance to a new stage of growth. Purchasing this stock
will also eliminate the need to pay Class A preferred stock dividends. Senshukai and REVIC Partners t herefore
agreed that the purchase and cancelation of the preferred stock would be the best course of action for Senshukai.
2. Summary of the purchase(1) Type of shares to be purchased: Class A preferred stock and Class B preferred stock(2) Total number of shares to be purchased and acquisition cost
Five shares of Class A preferred stock; 523,342,466 yen per share (total of 2,616,712,330 yen)
Nine shares of Class B preferred stock; 598,775,479 yen per share (total of 5,388,979,311 yen)
(3) Date of purchase: July 31, 2020
(4) Seller: Regional Economy Vitalization Corporation of Japan (REVIC)
3. Summary of the cancelation(1) Type of shares and total number of shares to be cancelled
Five shares of Class A preferred stock
Nine shares of Class B preferred stock(2) Date of cancelation: July 31, 2020
(3) Shares will be canceled only if the five shares of Class A preferred stock and nine shares of Class B preferredstock are purchased as explained in 2. above.

3. Other
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 2017 and 2018, there was an operating loss and a loss attributable to owners of parent. These losses
create significant doubts about the going concern assumption.
To eliminate these doubts and deal with other issues, 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 achieving the optimal size of business operations andon operational reforms, mainly in the mail-order business. These activities improved the gross profit margin by
reducing merchandise valuation losses that have been a structural component of business operations. Reforms havealso lowered fixed expenses. Due to these improvements, the consolidated operating profit in 2019 was higher thanour forecast.
In 2020, the second year of the plan, we are continuing to implement operational reforms. We are also strengthening
the catalog-based model for attracting customers and rebuilding the membership base. In the first half of 2020, thenumber of customers making purchases in the core Belle Maison business was higher than one year earlier,indicating that the downturn in this number has ended.
We will continue to implement numerous measures to make improvements in order to build a solid base for earnings
and return to growth backed by a recovery and stability in the performance of the Senshukai Group.
At the end of the second quarter of 2020, cash and deposits were 25,671 million yen. Senshukai also has acommitted credit line with the total amount of 10 billion yen with financial institutions (7 billion yen was unused at
the end of the second quarter of 2020). Consequently, we believe there are no concerns about liquidity because wehave a sufficient amount of working capital.
For these reasons, we believe there are no significant uncertainties regarding the going concern assumptio n.
In 2020, we expect lower sales and earnings mainly because of a smaller number of weddings and receptions in thebridal business due to COVID-19. However, a large number of these events have been postponed to the second halfof 2020 or 2021, demonstrating that there will continue to be demand for weddings and receptions. As a result, we
believe that the performance of the bridal business will improve when the COVID -19 crisis comes to an end. During
the COVID-19 crisis, we will take actions for reducing selling, general and administrative expenses and using these
expenses more efficiently. In addition, we will continue to monitor upcoming events involving this crisis and takeactions that comply with the requests of the Japanese government and local govern ments. We are making
preparations for growth, such as by reexamining the strategy for the bridal business and studying the feasibility ofstarting new services in this business, following the end of the COVID -19 crisis.
* This financial report is solely a translation of summary of “Kessan Tanshin” (in Japanese, including attachments), which has
been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience ofreaders who prefer an English translation.